Is DTE Energy (NYSE:DTE) a good hedge for your existing portfolios?

DTE Energy is generating 0.1265% of daily returns assuming volatility of 2.0779% on return distribution over 90 days investment horizon. Since many greedy investors are excited about utilities space, let's digest DTE Energy against its current volatility. We will discuss why some shareholders are closely monitoring DTE Energy's volatility.
Published over a year ago
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Reviewed by Rifka Kats

DTE Energy has roughly 552 M in cash with 2.96 B of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 2.87.
Volatility is a rate at which the price of DTE Energy or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of DTE Energy may increase or decrease. In other words, similar to DTE's beta indicator, it measures the risk of DTE Energy and helps estimate the fluctuations that may happen in a short period of time. So if prices of DTE Energy fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is DTE Energy's Liquidity

DTE Energy financial leverage refers to using borrowed capital as a funding source to finance DTE Energy ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. DTE Energy financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to DTE Energy's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of DTE Energy's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between DTE Energy's total debt and its cash.

DTE Energy Gross Profit

DTE Energy Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing DTE Energy previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show DTE Energy Gross Profit growth over the last 10 years. Please check DTE Energy's gross profit and other fundamental indicators for more details.

DTE Energy Volatility Drivers

DTE Energy unsystematic risk is unique to DTE Energy and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in DTE Energy you can also buy Eversource Energy. You can also mitigate this risk by investing in the utilities sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing DTE Energy important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in DTE Energy income statement and balance sheet. Here are more details about DTE volatility.
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0.970.980.940.910.750.430.740.790.320.89-0.6-0.22-0.14-0.310.11-0.460.85
0.990.980.940.940.780.380.680.830.340.89-0.56-0.16-0.2-0.260.09-0.360.76
0.930.940.940.860.550.210.790.830.310.81-0.53-0.2-0.14-0.4-0.05-0.450.75
0.950.910.940.860.790.440.560.760.280.85-0.45-0.08-0.22-0.190.06-0.280.68
0.780.750.780.550.790.570.370.520.430.71-0.53-0.23-0.13-0.050.24-0.160.54
0.440.430.380.210.440.570.250.020.180.610.060.24-0.370.350.430.080.3
0.630.740.680.790.560.370.250.480.480.55-0.54-0.510.1-0.38-0.06-0.420.59
0.830.790.830.830.760.520.020.480.130.7-0.6-0.12-0.2-0.33-0.19-0.350.6
0.310.320.340.310.280.430.180.480.130.35-0.17-0.3-0.29-0.10.060.070.15
0.920.890.890.810.850.710.610.550.70.35-0.310.14-0.53-0.050.23-0.190.69
-0.5-0.6-0.56-0.53-0.45-0.530.06-0.54-0.6-0.17-0.310.79-0.50.560.20.64-0.59
-0.07-0.22-0.16-0.2-0.08-0.230.24-0.51-0.12-0.30.140.79-0.750.520.270.49-0.26
-0.27-0.14-0.2-0.14-0.22-0.13-0.370.1-0.2-0.29-0.53-0.5-0.75-0.37-0.19-0.410.01
-0.2-0.31-0.26-0.4-0.19-0.050.35-0.38-0.33-0.1-0.050.560.52-0.370.680.91-0.41
0.120.110.09-0.050.060.240.43-0.06-0.190.060.230.20.27-0.190.680.490.17
-0.31-0.46-0.36-0.45-0.28-0.160.08-0.42-0.350.07-0.190.640.49-0.410.910.49-0.6
0.730.850.760.750.680.540.30.590.60.150.69-0.59-0.260.01-0.410.17-0.6
Click cells to compare fundamentals

Detailed Perspective On DTE Energy

The entity reported the last year's revenue of 12.18 B. Total Income to common stockholders was 1.11 B with profit before taxes, overhead, and interest of 3.42 B.

DTE Energy technical analysis indicates possible reversion

The standard deviation is down to 2.09 as of today. DTE Energy currently demonstrates below-verage downside deviation. It has Information Ratio of 0.02 and Jensen Alpha of 0.05. However, we do advice investors to further question DTE Energy expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.

Our Final Perspective on DTE Energy

Although many other companies under the utilities—regulated electric industry are still a bit expensive, DTE Energy may offer a potential longer-term growth to shareholders. Taking everything into account, as of the 28th of July 2020, we believe that at this point, DTE Energy is very steady with below average probability of distress within the next 2 years. From a slightly different point of view, the entity appears to be overvalued. Our current 30 days buy-or-sell advice on the firm is Strong Hold.

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