Progress Energy Inc (NYSE: PGN) In Regulated Power Space

It may be time to look at Progress Energy, a company that has become a near pureplay in the regulated services field. PGN is an integrated energy company serving the southeast region of the United States. The Company's subsidiaries include: Carolina Power & Light Company (PEC) and Florida Power Corporation (PEF) (collectively, the Utilities), each a business segment, are primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina, South Carolina and Florida. Each of these areas is on pace to remain strong growth areas in terms of population and jobs.

PGNs financial stability is improving steadily. Standard and Poor's recently upgraded their outlook on Progress from negative to stable and its short term rating from A-3 to A-2. The company is offering a dividend of 5.55% on the current share price of $44.32.

Future growth may come through acquisitions, but the company will most likely shore up its balance sheet first. It is expected that construction costs will decrease in upcoming years to help with this. If the company does expand it will do so in its core business areas, after recently spinning off its non-core ventures.

The company recently missed the street's 4Q estimates by 20%, mostly because of higher costs from plant outages and employee benefits. The decline in share price represents a source of opportunity for a good risk/reward play, with what I believe is limited downside in the future.