Energy holding company SCANA Corp. (SCG) reported strong fourth quarter results, driven by improved electric margins stemming from customer growth and rate increases, partially offset by higher expenses.
Earnings per share came in at 79 cents, ahead of the Zacks Consensus Estimate of 78 cents and the previous year's 76 cents. The company’s total operating revenue increased 8.4% year over year to $1,123.0 million and was 4.3% above the Zacks Consensus Estimate.
South Carolina Electric & Gas Company (SCE&G): Earnings from the segment, which is also SCANA's principal subsidiary, were 54 cents per share, up 8.0% from the year-ago level of 50 cents per share. The segment experienced higher margins on the back of increases in base rate under the Base Load Review Act and the Rate Stabilization Act, as well as improvement in its client base. To some extent, these factors were offset by higher expenses and share dilution.
As of Dec 31, 2012, natural gas and electric customers of SCE&G inched up 1.8% and 0.9% from the year-ago period to 323,000 and 670,000, respectively.
PSNC Energy: The segment achieved earnings of 17 cents per share during the quarter, flat from the year-ago period. Customer-fueled margin growth was canceled by increase in operations and maintenance expenses.
At quarter end, PSNC Energy’s customer base increased 2.0% year over year to 497,000.
SCANA Energy-Georgia: The segment – housing SCANA’s retail natural gas marketing business in Georgia – reported a profit of 6 cents per share, down from the year-ago quarter level of 8 cents on the back of milder weather.
Corporate and Other, Net: The profit in this business segment doubled to 2 cents a share in the quarter, helped by contribution from tower sales.
SCANA provided preliminary estimates of its 2013 earnings in the range of $3.25–$3.45 per share, with an internal target of $3.35 per share.
Stocks to Consider
SCANA currently carries a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at other electric utilities like Brookfield Infrastructure Partners L.P. (BIP), Otter Tail Corp. (OTTR) and Pike Electric Corp. (PIKE) as attractive investments. All these firms – sporting a Zacks Rank #1 (Strong Buy) – offer value and are worth accumulating at current levels.
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