Clean Energy Investments Are the Cornerstone of DTE's Growth Plan

Strategist

Travis Miller

Revenue segments as reported by the company.

Utility operations

Non-utility operations

Revenue Segments

Revenue is the money generated from normal business operations. Gross Profit is revenue minus cost of goods sold. Operating Income is revenue minus cost of goods sold and other operating expenses.

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Revenue & Operating Income

Net Income, also called net earnings, is calculated as revenue minus cost of goods sold, operating expenses, depreciation, interest, taxes, and other expenses.

Net Income

Gross Profit, Operating Income, and Net Income as a percentage of Revenue

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Margins

An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX.

Fuel, purchased power, and gas — utility

Fuel, purchased power, gas, and other — non-utility

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Year over year growth in Revenue and Operating Expenses.

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Outstanding Shares

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A decade-long transformation of Michigan's utility regulation and DTE Energy's business strategy sets up the company for a long runway of infrastructure growth opportunities.

Michigan's utility rate regulation has turned constructive for investors in recent years, resulting in support for earnings growth and investment at DTE Energy's electric and gas utilities. We expect these narrow-moat utilities to contribute roughly 90% of DTE's operating earnings after DTE spun off its gas midstream business in July 2021. Developments in DTE's 2022 electric rate review suggest utility rate regulation in Michigan remains constructive, supporting DTE's growth investments.

We expect DTE's electric and gas utilities will invest an average $4 billion annually during the next five years. Capital investments could total more than $40 billion during the next 10 years based on requirements to replace and upgrade energy infrastructure in eastern Michigan. DTE Electric is also investing heavily in gas power generation and renewable energy to replace its aging coal fleet. DTE's long-term growth plan will become clearer as regulators consider its integrated resource plan.

In the near term, the outcome of DTE's gas and electric rate reviews support our 6% annual earnings growth forecast, in line with management's 6%-8% target. Regulatory support for DTE's $84 million gas rate increase in 2022 was a positive for shareholders. Commissioners rejected a proposal that would have cut its allowed return on equity to 9.5% from 9.9% and slowed growth for several years. We expect regulators also will maintain DTE's 9.9% allowed ROE at its electric utility.

DTE's renamed nonutility business, DTE Vantage, is only a small part of earnings now that the company has split from DT Midstream. We expect the unit to house a growing portfolio of clean energy investments.

DTE's board has raised the dividend twice since the reset following the DTM spinoff in mid-2021, most recently a 7.6% increase for 2023. We expect the dividend to grow in line with earnings for the foreseeable future.

Business Strategy & Outlook

Service territory monopolies and efficient-scale advantages are the primary sources of economic moat for regulated utilities such as DTE Electric and DTE Gas. State and federal regulators typically grant regulated utilities exclusive rights to charge customers rates that allow the utilities to earn a fair return on and return of the capital they invest to build, operate, and maintain their distribution networks. In exchange for regulated utilities' service territory monopolies, state and federal regulators set returns at levels that aim to minimize customer costs while offering fair returns for capital providers.

This implicit contract between regulators and capital providers should, on balance, allow regulated utilities to earn greater than their costs of capital, though observable returns might vary in the short run based on demand trends, investment cycles, operating costs, and access to financing.

Intuitively, utilities should have an economic moat based on efficient scale, but in some cases regulation offsets this advantage, preventing excess returns on capital. The risk of adverse regulatory decisions precludes most regulated utilities from earning wide economic moat ratings. However, the threat of material value destruction is low, and normalized returns exceed costs of capital in most cases, leaving us comfortable assigning narrow moats to many regulated utilities.

We expect the company's nonutility segment will represent less than 10% of earnings in the long run. On balance, we believe the nonutility segment is not large enough to change DTE's overall narrow moat rating.

Narrow

Economic Moat

DTE Energy

DTE Energy Co. operates as a diversified energy company, which engages in the development and management of energy-related businesses and services. It operates through the following segments: Electric, Gas, DTE Vantage, Energy Trading, and Corporate and Other. The Electric segment consists of generation, purchase, distribution, and sale of electricity to residential, commercial, and industrial customers in southeastern Michigan. The Gas segment is involved in the purchase, storage, transportation, distribution, and sale of natural gas to residential, commercial, and industrial customers throughout Michigan, and the sale of storage and transportation capacity. The DTE Vantage segment focuses on projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers, produce reduced emissions fuel, and sell electricity and pipeline-quality gas from renewable energy projects. The Energy Trading segment covers energy marketing and trading operations. The Corporate and Other segment composed of various holding company activities, holds certain non-utility debt, and holds certain investments, as well as funds supporting regional development and economic growth. The company was founded in January 1995 and is headquartered in Detroit, MI.

Earnings data Q2 2023

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DTE Energy Co. operates as a diversified energy company, which engages in the development and management of energy-related businesses and services. It operates through the following segments: Electric, Gas, DTE Vantage, Energy Trading, and Corporate and Other. The Electric segment consists of generation, purchase, distribution, and sale of electricity to residential, commercial, and industrial customers in southeastern Michigan. The Gas segment is involved in the purchase, storage, transportation, distribution, and sale of natural gas to residential, commercial, and industrial customers throughout Michigan, and the sale of storage and transportation capacity. The DTE Vantage segment focuses on projects that deliver energy and utility-type products and services to industrial, commercial, and institutional customers, produce reduced emissions fuel, and sell electricity and pipeline-quality gas from renewable energy projects. The Energy Trading segment covers energy marketing and trading operations. The Corporate and Other segment includes various holding company activities, holds certain non-utility debt, and holds certain investments, as well as funds supporting regional development and economic growth. The company was founded in January 1995 and is headquartered in Detroit, MI.

DTE Energy's Q1 2023 earnings results were mixed demonstrating the need for a long-term strategy to yield success. The company has met broader market performance when adjusting for dividends exemplifying the company's ability to scale to new heights.

DTE Energy Company: Grid Modernization Creating Margin Expansion

DTE Energy Company is offering a nearly 8-year high dividend yield of 3.6%. DTE Energy expects to grow its earnings per share by 6%-8% per year on average over the next four years thanks to its massive capital investment plan.

DTE Energy Is Offering A Nearly 8-Year High Dividend Yield Of 3.6%

Refreshed organizational structure reinforces DTE's continued commitment to community engagement Refreshed organizational structure reinforces DTE's continued commitment to community engagement

DTE Energy names new leaders of DTE Foundation, Corporate Citizenship and Customer Outreach

New leadership will support DTE's electric and natural gas companies serving customers across Michigan New leadership will support DTE's electric and natural gas companies serving customers across Michigan

DTE Energy names new Energy Supply and Gas Sales & Supply leaders

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Company continues more than 100-year history of issuing cash dividend Company continues more than 100-year history of issuing cash dividend

DTE Energy Board of Directors declares quarterly dividend

DTE Energy Company 5.25 % Debentures 2017-01.12.77 Global

DTE Energy Company (DTE) Q1 2023 Earnings Call Transcript.

DTE Energy Company (DTE) Q1 2023 Earnings Call Transcript

DTE Energy's (DTE) first-quarter operating net income totals $274 million compared with $448 million in the year-ago quarter.

DTE Energy (DTE) Posts Lower-Than-Expected Q1 Earnings

DETROIT, April 27, 2023 (GLOBE NEWSWIRE) -- DTE Energy (NYSE:DTE) today reported first quarter earnings of $445 million or $2.16 per diluted share, compared with $394 million, or $2.03 per diluted share in 2022.

DTE Energy reports first quarter earnings and accomplishments

DTE Energy's (DTE) Q1 results are likely to reflect the impacts of warmer-than-normal weather patterns and a higher rate-based cost. However, grid strengthening might have boosted the Q1 performance.

What's in the Cards for DTE Energy (DTE) in Q1 Earnings?

DTE Energy (DTE) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.

Why DTE Energy (DTE) Could Beat Earnings Estimates Again

DTE Energy (DTE) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

DTE Energy (DTE) Expected to Beat Earnings Estimates: Can the Stock Move Higher?

Detroit, April 13, 2023 (GLOBE NEWSWIRE) -- DETROIT, Apr. 13, 2023 – DTE Energy (NYSE:DTE) will announce its first quarter 2023 earnings before the market opens Thursday, Apr. 27, 2023.

DTE Energy schedules first quarter 2023 earnings release, conference call

20,000 Kroger $100 food vouchers distributed to individuals and families, more solutions needed for Michigan residents 20,000 Kroger $100 food vouchers distributed to individuals and families, more solutions needed for Michigan residents

DTE Energy Foundation grants $3 million to United Way for Southeastern Michigan and partner agencies to feed families in need

Company spends $894 million with diverse suppliers and $900 million with Detroit-based businesses, creating thousands of local jobs Company spends $894 million with diverse suppliers and $900 million with Detroit-based businesses, creating thousands of local jobs

DTE Energy invests $2.5 billion with Michigan suppliers including Detroit-based and diverse businesses

Many investors are desperate for stability, as the events of the past week have caused flashbacks to 2008 and the financial collapse. DTE Energy Company enjoys incredibly stable finances regardless of conditions in the broader economy.

DTE Energy Offers Stability At A Price

DTE expects to grow its earnings per share by 6%-8% per year on average until 2027. DTE is trading at a forward price-to-earnings ratio of 17.1, which is lower than the10-year average of 18.2 of the stock.

DTE Energy Has Become Attractive Again

DTE Energy Co (NYSE:DTE ) Q4 2022 Earnings Conference Call February 23, 2023 9:00 AM ET Company Participants Barbara Tuckfield - Director, IR Gerardo Norcia - CEO & Chairman David Ruud - SVP & CFO Conference Call Participants Constantine Lednev - Guggenheim Securities Agnieszka Storozynski - Seaport Research Partners David Arcaro - Morgan Stanley Michael Sullivan - Wolfe Research Andrew Weisel - Scotiabank Anthony Crowdell - Mizuho Securities Operator Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today.

DTE Energy Co (DTE) Q4 2022 Earnings Call Transcript

DTE Energys (DTE) operating net income in the fourth quarter totals $266 million compared with $265 million in the year-ago quarter.

DTE Energy (DTE) Q4 Earnings Surpass, Reaffirms 2023 View

DETROIT, Feb. 23, 2023 (GLOBE NEWSWIRE) -- Ending a year focused on delivering cleaner energy, excellent customer service and a rewarding workplace experience, DTE Energy (NYSE:DTE) today reported 2022 earnings for the year of $1.1 billion, or $5.52 per diluted share, compared with $907 million, or $4.67 per diluted share in 2021.

DTE Energy closes year with strong financial results; well-positioned for 2023

DTE Energy's (DTE) Q4 results are likely to reflect impacts of varied weather pattern, along with benefits of accelerated deferred tax amortization.

What's in the Cards for DTE Energy (DTE) in Q4 Earnings?

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DTE Energy (DTE) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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