There is no question that the disaster in Japan has refocused investor attention on nuclear power's future both abroad and in the United States. Although it is true that nuclear power is not nearly as important to the U.S. power infrastructure as it is in some countries (notably France, Belgium, Sweden, Germany and Japan), it is more pervasive than some investors may realize.

Tutorial: The Industry Handbook

More to the point, while there is a wide range of company-level exposure to nuclear power, the reality is that a very large percentage of U.S. utilities have some level of exposure. Given the difficulties of decommissioning nuclear facilities and the trouble of installing alternate capacity, this is unlikely to change.

Nevertheless, investors may find it helpful to keep a cheat-sheet on the exposure levels of major U.S. utilities. Please note that the following tables to include somewhat arbitrary distinctions between "regulated" and "diversified" and that the numbers do not include power purchased under long-term contracts (which can be significant for some utilities).

Regulated Utilities

Name Ticker % of Capacity From Nuclear Nuclear Power Cap. (MW) Dividend Yield Return On Assets Price / Book
PG&E NYSE:PCG 31% 2,240 4.2% 3.2% 1.5
Duke Energy NYSE:DUK 19% 5,173 5.5% 3.3% 1.1
Progress Energy NYSE:PGN 19% 4,342 5.5% 4.0% 1.3
Pinnacle West NYSE:PNW 18% 1,146 5.1% 3.7% 1.2
Southern Co. NYSE:SO 9% 3,680 4.7% 4.4% 2.0

In comparison to the companies in this table, CMS Energy (NYSE:CMS), Wisconsin Energy (NYSE:WEC), and Alliant Energy (NYSE:LNT) are the largest regulated utilities (by generation capacity) with no nuclear generation assets. Interestingly, all have returns on assets in above 3.8% - slightly above the average of that small sample set above.

Diversified Utilities

Name Ticker % of Capacity From Nuclear Nuclear Power Cap. (MW) Dividend Yield Return On Assets Price / Book
Exelon NYSE:EXC 67% 17,047 5.1% 5.9% 2.0
Entergy NYSE:ETR 33% 10,219 5.0% 3.7% 1.4
First Energy NYSE:FE 30% 3,991 6.0% 4.0% 1.3
PSEG NYSE:PEG 27% 3,661 4.4% 6.3% 1.6
Dominion NYSE:D 23% 5,852 4.4% 5.5% 2.1
Next Era Energy NYSE:NEE 13% 5,493 4.1% 4.0% 1.6

What is interesting about these lists is how little the independent power producers participate in nuclear energy. NRG Energy (NYSE:NRG), Calpine (NYSE:CPN), Dynergy (NYSE:DYN) and GenOn (NYSE:GEN) are all significant power generators in terms of owned capacity, but only NRG operates any nuclear facilities - and even then nuclear power accounts for only 5% of its base. (For related reading, check out Emerging Nuclear Power Plays.)

Beware The Licenses
It seems improbable that the U.S. government will order any sort of widespread shutdowns of nuclear facilities that would resemble the shutdown of drilling in the Gulf after the Deepwater Horizon disaster. And that may be just as well - the Deepwater Horizon problem was clearly man-made and arguably highly reproducible, while the odds of an earthquake simultaneously knocking out all backup power to multiple U.S. nuclear facilities is remote.

That said, investors should keep an eye on the inspection and relicensing process. Entergy in particular would seem to have the most at risk here - the company has three licenses due to expire by the end of 2013 (on plants nearing 40 years of age). Xcel Energy (NYSE:XEL) and Dominion each have one expiration in that timeframe. By comparison, Exelon does not have a license expiration until 2016.

While the utilities will likely argue that the plants remain safe and should stay in operation, it seems likely that a thorough inspection will be in order and the companies have to face either expensive retrofits and upgrades or the shutdown of productive facilities.

The Bottom Line
Whether nuclear power is a growth opportunity in the United States or not, the fact remains that it is a significant power source at present. What's more, with so many utilities getting meaningful capacity from nuclear power plants, it seems unlikely that this trend will change quickly. (For further reading, check out Japan's Quake Won't Kill Nuclear Power.)

Related Articles
  1. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  2. Stock Analysis

    The Biggest Risks of Investing in Pfizer Stock

    Learn the biggest potential risks that may affect the price of Pfizer's stock, complete with a fundamental analysis and review of other external factors.
  3. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  6. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  7. Investing

    What’s the Difference Between Duration & Maturity?

    We look at the meaning of two terms that often get confused, duration and maturity, to set the record straight.
  8. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  9. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  10. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  1. What does low working capital say about a company's financial prospects?

    When a company has low working capital, it can mean one of two things. In most cases, low working capital means the business ... Read Full Answer >>
  2. Do nonprofit organizations have working capital?

    Nonprofit organizations continuously face debate over how much money they bring in that is kept in reserve. These financial ... Read Full Answer >>
  3. Can a company's working capital turnover ratio be negative?

    A company's working capital turnover ratio can be negative when a company's current liabilities exceed its current assets. ... Read Full Answer >>
  4. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  6. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>

You May Also Like

Trading Center