We have noted Duke Energy's positive performance during today's evening trading session, during which it logged a 1.0% outperformance of the S&P 500. At its current price of $95.36, the company is now trading in range of its average target price of $98.64, which calls into question its ability to keep moving higher. Analysts have given the Utilities—Independent Power Producers stock target prices ranging from $89.0 to $120.0 dollars per share, with an average rating of buy.
The market seems to share this optimistic view, since Duke Energy has a short interest of only 0.9% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Duke Energy is to look at the percentage of institutions that are invested in the stock. In this case, 66.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is mixed market sentiment on Duke Energy because its an analyst consensus of some upside potential, a buy rating, a very low short interest, and an average number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are DUK's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2023 | 8,048,000 | 12,529,000 | -4,481,000 | 17.63 |
| 2022 | 5,927,000 | 11,367,000 | -5,440,000 | -281.75 |
| 2021 | 8,290,000 | 9,715,000 | -1,425,000 | -35.59 |
| 2020 | 8,856,000 | 9,907,000 | -1,051,000 | 63.92 |
| 2019 | 8,209,000 | 11,122,000 | -2,913,000 | -32.23 |
| 2018 | 7,186,000 | 9,389,000 | -2,203,000 |
