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Con Edison Earnings Barely Misses, View Kept

Zacks Equity Research

Consolidated Edison Inc. (ED) posted first quarter 2013 earnings from ongoing operations of $1.08 per share, missing the Zacks Consensus Estimate by a penny. However, the quarterly result surged 6.9% from the year-ago profit of $1.01.

The year-over-year improvement largely reflects changes in the rate plans of the company’s utility subsidiaries. Again, the effects of normal winter weather as against the milder winter in the year-earlier quarter also contributed to earnings growth.

On a reported basis, the company registered earnings of 66 cents per share compared with 95 cents in the year-ago quarter.

Operational Results

Consolidated Edison reported quarterly operating revenue of $3,184.0 million, an increase of 3.4% from the year-ago quarter. However, the top line failed to match our expectation of $3,197.0 million by 0.4%.

Of the total quarterly revenue, Electric revenues rose 5.2% to $1,958.0 million, Gas revenues climbed 15.0% to $742.0 million and Steam revenues jumped 26.2% to $332.0 million, while Non-utility revenues nosedived almost 51% to $152.0 million during the reported quarter.

Con Edison's utility subsidiaries, Consolidated Edison Company of New York, Inc. (:CECONY) and Orange and Rockland Utilities, Inc. (O&R), in the first quarter of 2013, incurred response and restoration costs for Superstorm Sandy of $431.0 million and $90.0 million, respectively (including capital expenditures of $113.0 million and $15.0 million, respectively).


Consolidated Edison reaffirmed its earnings from ongoing operations for 2013 in the range of $3.65 to $3.85 per share.

At the Peers

Utilities have in general performed well in the first quarter. Public Service Enterprise Group Inc.’s (PEG) first quarter 2013 earnings came above the Zacks Consensus Estimate by 14.9%. This was mainly attributable to increased investment at PSE&G and solid performance from PSEG Power segments.

Xcel Energy Inc. (XEL) recorded operating earnings in the first quarter 2013 of 52 cents per share, up 26.8% from the year-ago quarter. Earnings also beat the Zacks Consensus Estimate by 20.9%. Earnings outperformed on the back of higher electric and gas margins owing to a severe winter, lower interest expense and constructive rate cases in Colorado, South Dakota and Wisconsin.

Again, Mich. based CMS Energy Corporation (CMS) posted first-quarter 2013 earnings per share of 53 cents on both adjusted and GAAP basis, beating the Zacks Consensus Estimate of 46 cents. Earnings were 43.2% higher than 37 cents earned in the year-ago quarter. A colder-than-normal weather spiked natural gas deliveries, driving better-than-expected results in the reported quarter.

Zacks Rank

Consolidated Edison currently retains a Zacks Rank #3 (Hold). Public Service, Xcel Energy and CMS Energy carry a Zacks Rank #2 (Buy) and are worth buying now.

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