Duke Energy (DUK) - description and valuation
Duke Energy, a Fortune 500 company, was formed in 1997 as a result of the merger of an electric utility company, Duke Power, and a natural pipeline operator, PanEnergy. Duke Energy is an integrated energy and energy services provider that delivers and manages electricity and natural gas throughout the United States and abroad. Duke operates three business segments: Electric Operations, Natural Gas Transmission, and Energy Services. Electric Operations generates, transmits, distributes, and sells electric energy in North and South Carolina. Natural Gas Transmission transports and stores natural gas for customers, primarily in the Mid-Atlantic, New England, and the Midwest. Energy Services is composed of several separate business units: Field Services gathers, processes, and markets natural gas, and transports and trades crude oil; Trading and Marketing markets natural gas, electricity, and other energy products; Global Asset Development develops, owns and operates energy facilities worldwide; and Other Energy Services provides engineering, consulting, and construction solutions.
Valuation
Using the discounted cash flow model (figure 1), the one year price target of $70 is based on an 18 multiple of the 2000 EPS estimate. The company is expected to outperform the market |
