Repeated Strategic Blunders And Regulatory Risks Weighing On Centrica

Contrary to what some seem to believe, utilities aren't foolproof toll-taking businesses that can be run on autopilot, but the U.K.'s Centrica (OTCPK:CPYYY) has committed a lot of unforced errors along the way. Although the company has done a good job of improving customer service and developing retail customer retention efforts, the company's foray into upstream oil and gas has destroyed value, and the company's efforts to generate growth from businesses like connected homes and distributed generation are uncertain at best. Making matters worse, aggressive pricing actions from competitors in the U.K. market has the government talking about taking a harder line on regulation and implementing more price controls.

Centrica offers a yield above 5%, and the company's cash flow should continue to grow from here (albeit slowly). With upstream capex now significantly de-prioritized, more of that cash could be directed towards shareholders once the company goes a little further with deleveraging. The shares look poised around fair value, with the potential of the growth opportunities balanced by the regulatory and competitive risks.

Continue here:
Repeated Strategic Blunders And Regulatory Risks Weighing On Centrica

Seeking Alpha: Can Inefficient Markets Work To E.ON's Advantage?

Market efficiency is a controversial topic in the best of times. Quite a few veteran investors who've lived through a bubble or two laugh at the idea of market efficiency in equity prices, but other markets are little better. Extensive government involvement (or interference, depending upon your point of view) has likewise created numerous inefficiencies throughout the European electricity markets, as changing government regulations and commodity volatility has whipsawed power prices and generation profitability.

Compounding matters for E.ON (OTCQX:EONGY), Germany's largest power company, has been a long run of poor management decisions that included ill-fated expansions into markets like Brazil and Turkey and an asset collection philosophy that has often looked patchwork at best.

Now the company seems to be on its way to a new era. Splitting the company will allow investors to choose between what should be a more growth-oriented business built around renewables and distribution and a legacy business that is leveraged to the classic generation model, commodity assets, and a more benign regulatory environment. I wouldn't assume that there is no risk that the split goes off without a hitch, but E.ON does look undervalued as presently constructed and could offer additional upside if these two companies are in fact more efficiently valued separately than they are together.

Follow this link to the full article:
Can Inefficient Markets Work To E.ON's Advantage?

Seeking Alpha: E.ON Still Trying To Find A New Way Forward

Life has not been easy for E.ON (OTCQX:EONGY). It would be bad enough if all the company had to deal with were declines in demand and weak pricing related to the economic malaise in Europe or the volatile price of natural gas. But there's a lot more impacting this story, including Germany's abandonment of nuclear energy, weak returns on emerging market assets, and guaranteed renewables feed-in tariffs.

Gone on are the days when E.ON was a safe, if boring, way to generate some solid dividend-fueled returns with the added boost of international diversification. While I do think the situation at E.ON isn't as bad as the market appears to be discounting, the level of operating uncertainty here is pretty high.

Read more here:
E.ON Still Trying To Find A New Way Forward

Seeking Alpha: Gazprom's Discount Seems Extreme

I can understand why investors may not be elbowing each other aside to buy shares of Gazprom (OGZPY.PK). Gazprom is controlled by the Russian government, and while it is a major source of Europe's natural gas supplies, Western oil and gas companies are hard at work boosting production in areas like the North Sea to reduce that dependence. It also doesn't help matters that Gazprom reports financial results on "Russian time", with March quarterly IFRS results only just reported in the first week of September.

And yet, we're talking about a company that produces 17% of the world's natural gas and holds a similar percentage of the world's natural gas reserves. We're talking about a company that literally monopolizes Russia's gas exports and represents a major source of energy to Europe. We're also talking about a company that will likely begin exporting natural gas to China in the future, and could ultimately supply even more of the world's gas needs.

Trading at approximately 2.6x 2014 EBTIDA estimates, Gazprom's valuation seems to already incorporate some rather sizable doubts about the company's ability to improve domestic pricing, control production costs, and support rising dividend payouts. While Gazprom shares are not appropriately for investors with low appetite for risk, the shares do seem undervalued even by the stressed standards of Russian energy companies and offer more than 40% upside from today's levels.

Read the full article here:
Gazprom's Discount Seems Extreme

Investopedia: Nuclear Energy - The Emotion Trade Is In Full Swing

There are plenty of old sayings that advise investors to swim against the tide and invest into troubled sectors when pessimism is at its worst. That is all well and good, but precious few investors have the self-confidence and long-term focus to just ignore a 20% or 30% near-term loss on a new position. With that in mind, then, investors should certainly do their due diligence on now-troubled nuclear power stocks but let the dust settle a bit before taking on new positions.

Shoot First, Ask Questions Later
In the wake of the combined earthquake and tsunami disaster in northeastern Japan, and the resulting emergencies at multiple nuclear facilities in Japan, public fear about nuclear power is once again running high. With activists already jumping on their airwaves to exaggerate and misinform, it seems inevitable that the nuclear industry has lost whatever momentum and credibility it had rebuilt in the 25 years since the Chernobyl disaster.

Investors need go no further than the stocks of those companies exposed to the nuclear power industry. Go-to names like uranium miners Cameco (NYSE:CCJ) and Denison (AMEX: DNN) and engineering and construction firm Shaw (Nasdaq:SHAW) were among those that took a significant drop in the early trading after the disaster struck. Since then, even well-diversified names like General Electric (NYSE:GE) (which has some, but not a lot, of nuclear energy exposure) have come under selling pressure.

Please continue:
http://stocks.investopedia.com/stock-analysis/2011/Nuclear-Energy---The-Emotion-Trade-Is-In-Full-Swing-CCJ-DNN-SHAW-EXC-GE-JASO-ES0317.aspx