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Morningstar | DUK Updated Forecasts and Estimates from 06 Nov 2018

Duke Energy is one of the largest utilities by market cap in the United States and has completed its transition to a predominantly regulated utility. Duke operates in constructive regulatory regions, particularly in Florida, which allows it to recover costs in a timely fashion through supportive regulatory outcomes. In the Carolinas, management will resort to more frequent rate case filings to recover capital costs. While not ideal, this has been an effective strategy. This regulatory support is a key reason for Duke's narrow moat.In 2018-22, we anticipate cumulative capital expenditures of $37 billion. The company's highly visible capital program focuses on grid modernization, renewable energy, natural gas infrastructure investments and environmental remediation. We think Duke's highly capable management team can complete the program, which supports our 5% annual earnings growth estimate and is consistent with management expectations. Management continues to justify the $6.7 billion paid for Piedmont Natural Gas, which is one of the strongest growth areas for the company. The acquisition has strong strategic rationale, with demographic overlap and significant growth potential above Duke's stand-alone opportunities. We think management can achieve its goal to double the earnings contribution from gas utilities and infrastructure business in the next 10 years, based on customer growth and investment opportunities it continues to uncover. The company's Atlantic Coast Pipeline continues to progress on the environmental and regulatory front, with ample opportunity for offshoot investments from coal plant retirements and customer additions upon completion. All major permits have been received for the company's investment in the Atlantic Coast Pipeline. Costs for the Atlantic Coast Pipeline recently increased from $6.5 billion to $7.0 billion. Duke, and majority partner Dominion, will now pursue a phased-in service with the pipeline in full operation by mid-2020.Commercial power, the company's unregulated subsidiary, consists of high-quality renewable energy assets backed by long-term contracts.