IDACORP, Inc.’s IDA long-term investments should fortify infrastructure and add more clean energy generation assets to its portfolio. Consistent customer growth should increase the demand for IDA’s services, bolstering its financial performance.

However, this Zacks Rank #3 (Hold) company has to face risks related to strict licensing processes and weather fluctuations.

Factors Acting in Favor of IDA

IDACORP’s regulated electric operations in Idaho generate a relatively stable and growing income stream. The company invested $943 million in 2024 and now expects capital expenditure in the range of $1-$1.1 billion in 2025, $1.25-$1.35 billion in 2026 and $3.1-$3.6 billion during 2027-2029. The strong capital expenditure should further strengthen IDA’s infrastructure and expand its operations, allowing it to serve a wider customer base.

In 2024, Idaho Power’s customer base improved 2.6% year over year. This trend is expected to continue as improvements in economic conditions in its service territories will bring in more customers. The rising customer base is creating more demand for IDA’s services and boosting its performance.

A sustained focus on cost control has enabled the company to maintain rates lower than those of other electricity providers. The average industrial and residential rates charged by Idaho Power are much lower than the national average. The low cost of energy makes it a favorable destination for investors setting up a new business in the region, increasing the demand for electricity. The expanding generation portfolio will enable it to cater to the growing customer base.

Headwinds for IDA

Obligations imposed in connection with hydropower license renewals and permitting may require significant capital expenditures, increase operating costs, reduce hydropower generation and negatively impact IDACORP's financial condition. The original license of its Hells Canyon Hydroelectric Project expired in 2005. Since then, the company has been receiving annual permits and is working on a new long-term license. Relicensing costs of $497 million (including AFUDC) for the HCC were included in construction work in progress on Dec. 31, 2024.

Less favorable weather conditions in summer months can reduce demand for electricity for air conditioning or irrigation purposes from the irrigation customers, which can affect its overall operation and performance.

IDA’s Stock Price Performance

In the past three months, shares of the company have risen 3% compared with the industry’s 1.7% growth.

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Stocks to Consider

Some better-ranked stocks from the same industry are Exelon Corporation EXC, WEC Energy WEC and OGE Energy OGE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EXC’s long-term (three to five years) earnings growth rate is 5.71%. The Zacks Consensus Estimate for 2025 earnings per share (EPS) is pinned at $2.66, indicating a year-over-year increase of 6.4%.

WEC Energy’s long-term earnings growth rate is 6.79%. The Zacks Consensus Estimate for 2025 EPS is pinned at $5.24, implying year-over-year growth of 8.5%.

OGE’s long-term earnings growth rate is 6.05%. The Zacks Consensus Estimate for 2025 EPS is pinned at $2.27, suggesting a year-over-year improvement of 3.7%.

 

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This article originally published on Zacks Investment Research (zacks.com).

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