Utilities

The Utilities Sector encompasses those companies considered electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.

Last % Change Market Cap Market Weight Weighting Recommendations
S&P Capital IQ Ned Davis Research (PDF)
+0.04% $1.12T 3.08% Underweight -1%
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Sector Commentary from Standard & Poor's

S&P Capital IQ recommends underweighting the S&P 500 Utilities sector. Year to date through April 3, 2014, the S&P 500 Utilities Index, which represented 3.0% of the S&P 500 Index, was up 8.4% in price, compared with a 2.2% gain for the S&P 500. In 2013, this sector index rose 8.8%, versus a price advance of 29.6% for the 500. There are four sub-industry indices in this sector. Electric Utilities is the largest, representing 56.6% of the sector's market value, while Gas Utilities is the smallest, accounting for 1.2% of the sector.
The cap-weighted average of this sector's component company S&P Capital IQ STARS (Stock Appreciation Ranking System) is 3.2, as compared with a cap-weighted average of 3.5 for the S&P 500. The sub-industry within this sector that currently shows the highest average STARS is Independent Power Producers & Energy Traders at 4.5. The sub-industry with the lowest average STARS is Multi-Utilities at 2.9. According to Capital IQ, the sector is projected to record a 5.5% year-over-year increase in operating earnings per share in 2014, as compared with the S&P 500's estimated EPS growth of 7.5%. During 2013, this sector posted a 0.6% advance in EPS, versus an increase of 5.9% for the S&P 500. The sector's price-to-earnings ratio of 15.9X, based on consensus 2014 operating EPS estimates, is below the S&P 500's forward P/E of 16.0X. Capital IQ also reports that the consensus long-term EPS growth estimate for this sector is 4.25% versus the S&P 500's 12.0%, giving the sector a P/E-to-projected EPS growth rate (PEG) ratio of 3.8X, which is well above the broader market's PEG of 1.3X. Finally, this sector pays a dividend yield of 3.8%, as compared with the yield of 2.0% for the S&P 500.
S&P Capital IQ's proprietary technical indicator for this sector currently shows a positive reading. In researching the past market history of prices and trading volume for each company, S&P Capital IQ's computer models apply special technical methods and formulas to identify and project price trends for the sector.

Underweight

Understanding Weighting Recommendations

Sector weighting recommendations are provided by independent, third-party research firms to help further refine your analysis.

Some sectors get "over," "market," or "under" weighted, which means that the research firm recommends that more, the same, or less of the sector should be held in your portfolio than is held in the market.

Learn more about the average recommendation holding period and methodology of the research firms:

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Performance

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Past performance is no guarantee of future results.