No. of Recommendations: 3

TT Interest coverage ratio 4.12
Current Ratio 1.42
Capital structure 58% debt, 42% equity
Free cash flow positive to the tune of 1,077,000,000
A- is a fair grade based on the above, BBB+ is mildly conservative unless there is junk tucked in the notes I didn't bother to look at.

A debt heavy utility, who would of thought :P

I would not touch their debt for less than 7.45% but current environment is not going to price it that way so if you need debt you may have to except the lower payout for the accepted risk.

Relatively speaking the money to be made is on the equity side. The stock is mired in ties to things nuclear. The current administration was kicking the nuclear can down the road with pleasant rhetoric. With the incident in Japan no pro nuclear rhetoric is politically prudent. Regulators at the state and fed level have also put the brakes on nuclear projects from proposal to ground all ready broken. Toss in Vermont has decided that ETR's Yankee plant should be shut down. ETR has tried to work through the process and recently resorted to suing the state to keep the plant open.

The dividend yield is 4.88% and if they can put the current issues behind them $75 - $80 is a fair price for the stock. That is one big IF.

As near as I can tell there is no reasonable compensation for the risk taken on either the equity or the debt side. If forced to choose the equity side seems to have the better risk reward profile.


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