April 6, 2009 - DPL, Inc. (DPL-NYSE) through its subsidiary, The Dayton Power and Light Company, operates as a regional electric energy company in the United States. It engages in the generation, transmission, and distribution of electricity to residential, commercial, industrial, and governmental customers in west central Ohio.

Share earnings for the fourth quarter of 2008 jumped by 38%. Not many utilities see income move up like that, going from 40 cents in the last quarter of 2007 to 64 cents at the end of 2008. Improvement came from DPL's coal optimization business, higher rates and lower operating and maintenance costs. If wholesale revenues hadn't been lower, gains would have been more dramatic.

Analysts predict 2009 will finish with earnings per share (eps) of $2.22, up from $2.02 last year, then in 2010, go to $2.49. Next earnings release will be on April 29 for the first quarter report. Look for 70 cents eps, a little above the 66 cents of last year's first quarter. In the second quarter, analyst see 44 cents eps, well ahead of the 34 cents of last year's second period.

The Dayton Power and Light unit has established distribtuion and generation rates through 2012, thanks to an agreement reached in February. Increased revenues of $35 million this year and next will be in effect but then rates are frozen for 2011 and 2012. There are some exceptions to the agreement related to weather, regulatory issues, taxes and climate change laws. The company also will implement a fuel-recovery mechanism designed to track and adjust fuel-cost levels. As an added incentive for efficiency, the company gets to have 75% of gains coming from its coal-optimization process.

The new administration's stimulus program may help the utility industry. Part of the plan, $8 billion, is allocated to renewable energy projects, $43 billion for transmission-related projects, and $20 billion for energy efficiency. Now in its infancy, look for these funds to ultimately help DPL and all utilities.

More numbers: Market cap is $2.66 billion. Forward P/E is 9.2. Price to Book is 2.71. Operating margin for the last 12 months was 27.19, and Profit margin was 15.27%. Total cash is $78 million. Total debt is $1.55 billion. Current ratio is .97. Book Value is $8.41. 52-week high was $28.89 on May 22, 2008, low was $18.52 on November 21, 2008. There are 115.97 million shares outstanding. Institutions own 55.10% of them. The annual dividend is $1.14, up from $1.10 last year. The payout ratio (percent of earnings to pay dividend) is 52%. The last divdend paid was on February 28.

This stock should appeal to almost any moderate to conservative investor. For the last 3 years, the dividend has increased. That pattern should continue as the company has its rates in place for the next 4 years. The stimulus program could have a positive effect on DPL, though not right away. If you're looking for a solid company with a decent dividend, spend more time with DPL.

Company Web site: www.dplinc.com

- Ted Allrich