The Zacks Analyst Blog Highlights: IBM, Sempra Energy, NRG Energy, Laclede Group and Questar

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Apr 19, 2013, 09:52 ET

CHICAGO, April 19, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include IBM (NYSE:IBM), Sempra Energy (NYSE:SRE), NRG Energy Inc. (NYSE:NRG), The Laclede Group, Inc. (NYSE:LG) and Questar Corporation (NYSE:STR).

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Here are highlights from Thursday's Analyst Blog:

IBM Misses Earnings, Revenues in Q1

IBM (NYSE:IBM) missed the Zacks Consensus Estimate for the first time in years during its first quarter. Years!

The computing powerhouse also missed on the top line, in a quarterly performance that is sure to add to growing concerns about the market and the economy. Mercifully, Big Blue kept its outlook for 2013 unchanged, which is going to have to pass as good news in an otherwise surprising report.

As of this writing, shares of Big Blue are down more than 4% after hours.

IBM reported operating earnings per share of $3 for the first quarter, which was below the Zacks Consensus Estimate of $3.06. The result was 8% better than the year-ago performance.

Total revenues of $23.4 billion were also below the Zacks Consensus Estimate of $24.5 billion. While the earnings miss is surprising, the revenue miss is more disappointing. In its fourth quarter, IBM had topped expectations for the first time in several quarters. We were hoping that was the beginning of a turnaround in this department. Guess not.

The company stated that it failed to close a number of software and mainframe transactions, which have moved into the second quarter. Meanwhile, the services business performed as expected.

IBM was pretty much standing still heading into this report. With a Zacks Rank #3 (Hold), there had been very few earnings estimate revisions in the past several months. The Zacks Consensus Estimate for this year is at $16.74 per share, which is up from $16.58 three months ago, but had been rather stagnant since. In fact, the consensus is down a penny in the past 7 days.

It will be interesting to see what kind of repercussions this report has on earnings season. IBM is seen as a bellwether not only for technology, but the market in general. A good report could have helped the souring mood among investors, but it will instead bring a lot of questions.

Sempra Buys More Renewables

San Diego Gas & Electric (SDG&E), a subsidiary of Sempra Energy (NYSE:SRE), has entered into power purchase agreements ("PPA") to buy 62 megawatts ("MW") of capacity from five renewable energy projects in California. These projects comprise three solar and two wind operations.

Per a 20-year agreement, Sempra will buy 7 MW of solar power from Northlight Power's NLP Valley Center and 20 MW of power from Silverado Power, LLC's Zodiac projects. Both these solar projects are located in San Diego County. NLP Valley Center is expected to come online in Sep 2014 and Zodiac in May 2015.

The company will buy 20 MW of energy from E.ON Climate and Renewables' Maricopa West project, according to a 15-year power agreement. This project will be built in Kern County and is expected to come online in Jan 2015.

In a 10-year agreement, the company will buy wind power from Terra-Gen's 3.5 MW Oak Creek that will be built in Kern County. This project is expected to come online in Jan 2014. Sempra has entered into another 10-year agreement to buy 11.2 MW from San Gorgonio Westwinds II projects that will be built at Riverside County. This wind project is expected to begin operations in Jan 2015.

However, these five agreements have yet to be approved by California Public Utilities Commission.

Sempra is on track to meet the state's renewable energy goal that calls for generating 33% of energy from renewable sources by 2020. In 2011, the company entered into 23 renewable energy contracts that resulted in 20.8% of energy produced from renewable sources.

In 2012, the company signed 13 such contracts, resulting in 20.3% of energy from renewables. The company believes that if the same trend continues then it will be able to generate 25% of renewable energy by 2016.

Recently, the first large scale renewable energy project, namely the NRG Solar Borrego Project, came online in San Diego County which was developed by

NRG Energy Inc.

(NYSE:

NRG

Currently, Sempra has six projects under construction in the Imperial Valley. These projects include the Ocotillo Express Wind Project that was connected to the Sunrise Powerlink in Dec 2012.

All these project developments have enabled the company to create a well-balanced renewable portfolio that is a combination of a broad spectrum of energy sources including solar, wind, biomass, biogas and geothermal energy. The company presently retains a short-term Zacks Rank #2 (Buy).

Other stocks worth considering are The Laclede Group, Inc. (NYSE:LG) and Questar Corporation (NYSE:STR), both with a Zacks Rank #2 (Buy).

Based in California, Sempra Energy is an energy services holding company involved in the sale, distribution, storage, and transportation of electricity and natural gas.

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