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Duke Energy (DUK) Q4 Earnings Miss Estimates, Revenues Beat

Zacks Equity Research

Duke Energy Corporation DUK reported fourth-quarter 2018 adjusted earnings of 84 cents per share, which missed the Zacks Consensus Estimate of 89 cents by 5.6%.

Earnings also declined 10.6% year over year, due to higher depreciation and amortization expenses on a growing asset base, higher storm-related costs, and a lower tax shield on holding company interest as a result of the Tax Act.

GAAP earnings were 65 cents in the fourth quarter compared with $1 in the prior-year quarter.

For 2018, the company reported adjusted earnings of $4.72 per share, missing the Zacks Consensus Estimate by 0.63%. Full-year earnings however improved 3.3% from the previous year.

Total Revenues

Total operating revenues came in at $6,115 million, down 5.6% from $6,482 million a year ago. The figure however surpassed the Zacks Consensus Estimate of $5,612 million by 9%.

In 2018, the company’s total operating revenues were $24.52 billion, up 4% from $23.56 billion a year ago. The figure surpassed the Zacks Consensus Estimate of $24.07 billion by 1.87%.

The regulated electric unit’s revenues were $22.10 billion (up 4.34%), representing approximately 90.1% of total revenues in 2018.

Revenues from the regulated natural gas business totaled $1.77 billion, up 2.25% year over year.

Non-regulated and Other segment generated revenues of $0.65 billion, down 0.46% year over year.

 

Duke Energy Corporation Price, Consensus and EPS Surprise

Duke Energy Corporation Price, Consensus and EPS Surprise | Duke Energy Corporation Quote

 

Operational Update

The company’s total operating expenses were $19.75 billion in 2018, up from $17.97 billion in 2017. Costs increased on higher fuel used in electric generation and purchased power, higher natural gas, operation, maintenance and other expenses, escalated depreciation and amortization expenses, increased property and other taxes and elevated impairment charges.

Operating income in 2018 decreased 16.7% to $4.68 billion from $5.62 billion a year ago.

Interest expenses rose to $2.09 billion from $1.98 billion in the previous year.

Quarterly Segmental Highlights

Electric Utilities & Infrastructure: Adjusted income in the fourth quarter was $628 million, up from $609 million in the year-ago quarter. The upside was driven by higher rider revenues and the contribution of rate cases in North Carolina.

Gas Utilities & Infrastructure: Adjusted income in the fourth quarter was $113 million, down from $114 million a year ago.

Commercial Renewables: This segment reported adjusted income of $13 million in the quarter compared with $15 million a year ago.

Other: The segment includes corporate interest expenses not allocated to other business units, results from Duke Energy’s captive insurance company and other investments.

Adjusted net expenses were $149 million, up from $82 million in the year-ago quarter.

Financial Condition

As of Dec 31, 2018, the company had cash & cash equivalents of $442 million, up from $358 million as on Dec 31, 2017. Long-term debt was $51.1 billion at the end of 2018 compared with $49 billion at 2017-end.

In 2018, net cash from operating activities was $7,186 million compared with $6,624 million in the prior year.

Guidance

The company issued its earnings expectation for 2019. It expects adjusted earnings per share of $4.80-$5.20. Duke Energy extended long-term earnings growth expectation of 4-6%, through 2023.

Zacks Rank

Duke Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

American Electric Power Co., Inc. AEP reported fourth-quarter 2018 operating earnings per share (EPS) of 72 cents, in line with the Zacks Consensus Estimate.

NextEra Energy, Inc. NEE reported fourth-quarter 2018 adjusted earnings of $1.49 per share, which fell short of the Zacks Consensus Estimate of $1.51 by 1.3%.

Xcel Energy Inc. XEL posted fourth-quarter 2018 operating earnings of 42 cents per share, in line with the Zacks Consensus Estimate.

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