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Con Ed (ED) Up 1.7% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Consolidated Edison (ED). Shares have added about 1.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Con Ed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Consolidated Edison Q1 Earnings Miss, Revenues Down Y/Y

Consolidated Edison Inc. reported first-quarter 2020 adjusted earnings of $1.35 per share, which missed the Zacks Consensus Estimate of $1.43 by 5.6%. The bottom-line figure, moreover, declined 2.9% from $1.39 reported in the prior-year quarter.

Barring one-time adjustments, the company posted GAAP earnings of $1.13 per share, compared with GAAP earnings of $1.31 in the first quarter of 2019.

Total Revenues

In the reported quarter, the company’s total revenues of $3,234 million missed the Zacks Consensus Estimate of $3,603 million by 10.2%. Moreover, the top line declined 8% from $3,514 million in the year-ago quarter.

Electric revenues totaled $1,906 million in the first quarter, down 1.8% from the prior-year quarter’s $1,941 million. Gas revenues declined 10% to $931 million.

Further, steam revenues fell 22.1% to $250 million. Meanwhile, non-utility revenues amounted to $147 million, slumping 32.6% from $218 million registered in the year-earlier quarter.

Operating Statistics

Total operating expenses in the first quarter declined 11% year over year to $2,426 million.

Purchase power; gas purchased for resale; fuel, taxes and other operations; and maintenance expenses declined 16.3%, 47.5%, 26.4% and 11.8%, respectively, from the prior-year quarter’s numbers. However, depreciation and amortization and taxes, other than income taxes, increased 13.8% and 5.5% year over year, respectively.

Financials

Cash and temporary cash investments, as of Mar 31, 2020, summed $1,395 million compared with $981 million as of Dec 31, 2019.

Long-term debt was $19.423 million as of Mar 31, 2020, compared with $18,527 million at 2019-end.

At the end of the first quarter, cash from operating activities amounted to $412 million compared with $464 million a year ago.

Guidance

For 2020, the company continues to expect adjusted earnings per share in the $4.15-$4.35 range. The Zacks Consensus Estimate for full-year earnings, pegged at $4.37, lies just above the company’s guided range.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Con Ed has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision looks promising. Notably, Con Ed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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