Consolidated Edison Beats on Earnings Yet Again, Lifts View
Consolidated Edison Inc. (ED) posted third-quarter 2014 earnings from ongoing operations of $1.49 per share, beating the Zacks Consensus Estimate of $1.44 by 3.5%. Earnings also increased 0.7% from the year-ago figure of $1.48 per share. The upbeat performance reflected higher revenues from its gas utility on account of lower fuel costs borne by the company.
Consolidated Edison, Inc - Earnings Surprise | FindTheBest
Including the impact of lease transactions and the net mark-to-market impact of the competitive energy business, the company registered earnings of $1.49 per share compared with $1.58 in the year-ago quarter.
Quarterly Operational Results
Consolidated Edison reported revenues of $3,390 million, surpassing the Zacks Consensus Estimate of $3,352 million by 1.1%. The top line was however down 2.7% year over year. The decline, resulting primarily from lower electric, steam and non-utility revenues, was partially offset by higher gas revenues.
Electric revenues declined 1.3% to $2,786 million in the reported quarter from the prior-year figure of $2,822 million. Steam revenues registered a year-over-year fall of 36%. On a year-over-year basis, non-utility revenues decreased 12.1% to $321 million, while gas revenues edged up 5.3% to $237 million from $225 million.
Total operating expenses were down 2.2% year over year to $2,571 million. Operating expenses decreased on account of lower purchased power and fuel expenses, partially offset by higher operations and maintenance, and depreciation and amortization expenses.
Purchased power expenses decreased 7.5% and fuel cost was down 26.8%. Operations and maintenance expenses increased 7.8% and depreciation and amortization expenses registered a year-over-year increase of 4.7%.
Net interest expense in the reported quarter increased to $150 million as compared to $146 million in the year-ago quarter. Interest expenses increased primarily due to higher long-term debt in the reported period.
Financials
Cash at the end of Sep 30, 2014 was $205 million compared with $674 million at the end of Dec 31, 2013. Net cash flow from operating activity for the first nine months of 2014 was $1,751 million as compared to $1,238 million in the comparable period a year ago.
Total investments as on Sep 30, 2014 stood at $740 million as compared to $461 million at the end of 2013.
Long-term debt was $11 billion as of Sep 30, 2014, up from $10.5 billion at 2013 end.
Guidance
For 2014, Consolidated Edison increased its earnings from ongoing operations guidance to the range of $3.80 to $3.90 per share from its previous forecast of $3.70 to $3.85 per share. The solid third-quarter performance led management to revise its guidance.
Peer Releases
Public Service Enterprise Group Inc. (PEG) reported third-quarter 2014 operating earnings of 77 cents per share, surpassing the Zacks Consensus Estimate of 75 cents by 2.7%.
PG&E Corp’s (PCG) adjusted operating earnings of $1.73 per share in the third quarter of 2014 comfortably surpassed the Zacks Consensus Estimate of $1.15 by 50.4%.
Edison International (EIX) reported solid third-quarter 2014 results wherein its adjusted earnings of $1.52 per share came in ahead of the Zacks Consensus Estimate of $1.35 by 12.6%.
Our Take
Consolidated Edison benefitted immensely from reduced fuel costs and rendered impressive third-quarter results even though a mild summer resulted in a fall in its electric revenues. The company has lifted its earnings guidance for 2014. The company is focusing on operational efficiency to achieve its revised 2014 revised target.
Consolidated Edison currently has a Zacks Rank #2 (Buy).
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