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Edison International (EIX) Up 3% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Edison International (EIX). Shares have added about 3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Edison International 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.

Edison International's Q2 Earnings Beat, Revenues Miss

Edison International reported second-quarter 2019 adjusted earnings of $1.58 per share, which surpassed the Zacks Consensus Estimate of $1.15 by 37.4%.
 
Excluding adjustments, quarterly earnings came in at $1.20 per share from continuing operations compared with 85 cents in second-quarter 2018.

The year-over-year bottom-line improvement can be attributed to solid sales and operating income growth.
 
Total Revenues
 
Edison International's second-quarter revenues totaled $2.81 billion, which missed the Zacks Consensus Estimate of $3.15 billion by 10.8%. However, the top line came almost in line with the year-ago quarter’s figure.
 
Segment Results

Southern California Edison’s (SCE) second-quarter adjusted earnings came in at $1.66 per share compared with 91 cents a year ago. The uptick can be attributed to the adoption of the 2018 General Rate Case (GRC) final decision in the reported quarter, the timing of regulatory deferrals related to wildfire insurance and wildfire mitigation costs. Also, higher revenues due to a change in estimate under the FERC formula rate mechanism contributed to this unit’s bottom line.
 
The Parent and Other segment incurred an adjusted loss of 8 cents per share in the quarter under review compared with the year-ago quarter’s loss of 6 cents. The increase in core losses was mainly due to higher interest expense as a result of increased borrowings.

Financial Update

As of Jun 30, 2019, Edison International's cash and cash equivalents amounted to $257 million compared with $144 million as of Dec 31, 2018. Long-term debt summed $15.88 billion, higher than the 2018-end level of $14.63 billion.

Net cash from operating activities during the first six months of 2019 was $598 million compared with $1,217 million in the prior-year period. Total capital expenditures totaled $2,235 million at the end of the second quarter, up from $2,159 million a year ago.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -5.48% due to these changes.

VGM Scores

At this time, Edison International 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

Edison International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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