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Consolidated Edison to Gain From Capex Plan & Renewables

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We have recently issued an updated research report on Consolidated Edison, Inc. ED. The company reported second-quarter 2018 adjusted earnings of 61 cents per share, surpassing the Zacks Consensus Estimate of 57 cents by 7%. The bottom line also improved 5.2% from 58 cents in the year-ago period.

In the reported quarter, total revenues of $2,696 million outpaced the Zacks Consensus Estimate of $2,642 million by 2%. Moreover, the top line improved 2.4% from $2,633 million registered in the prior-year quarter.

Consolidated Edison continues to follow a systematic capital investment plan for infrastructure development and maintain the reliability of its electric, gas and steam delivery systems. However, it faces interest rate risk due to variable rate debt.

What’s Driving Consolidated Edison?

Estimates for Consolidated Edison have been revised upward over the past 30 days.. Notably, the Zacks Consensus Estimate for the company’s 2018 and 2019 earnings have both moved 0.2% north to $4.27 and $4.44 per share, respectively.

Consolidated Edison’s regulated utilities provide it with a stable earnings base coupled with positive outcomes from the rate hike appeal by its utilities. This will likely encourage the company to invest more in infrastructure projects, which will subsequently improve reliability. Going ahead, the company boasts a robust capital expenditure plan of around $11.1 billion for the 2017-2019-time frame. In 2018, the company expects to invest $4 billion, of which, it plans to spend $3.2 billion on its energy delivery systems, $0.4 billion on gas pipeline businesses and $0.4 billion on renewable electric production projects.

Also, Consolidated Edison is steadily pumping its resources into enhancing its renewable generation assets. The company is gradually converting some of its operations into gas, which is more environmentally friendly. As of Jun 30, 2018, Consolidated Edison had renewable generating capacity of 1,601 megawatts (MW). Of this, 1,383 MW is in service while 218 MW is under construction.

Consolidated Edison focuses on maximizing its shareholder value through both share price appreciation and increased dividend payouts. On Jan 18, 2018, the company announced that its management hiked its quarterly dividend to 71.5 cents per share from the prior distribution of 69 cents. This marked the 44th straight annual dividend hike by the company.

However, adverse decisions by the commissions in pending regulatory cases might affect Consolidated Edison’s earnings. Also, the company is exposed to interest rate risk on variable rate debt and to new debt financing required for funding capital obligations.

Other Utility Releases With Earnings Beat

DTE Energy DTE reported second-quarter 2018 operating earnings per share (EPS) of $1.36, which exceeded the Zacks Consensus Estimate of $1.11 by 22.5%.

Ameren Corporation AEE delivered second-quarter 2018 earnings of 97 cents per share from continuing operations, trumping the Zacks Consensus Estimate of 79 cents by 22.8%.

Algonquin Power & Utilities AQN posted quarterly earnings of 11 cents, beating the Zacks Consensus Estimate of 9 cents by 22.2%.

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