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Edison International (EIX) Up 4.5% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Edison International (EIX). Shares have added about 4.5% 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 Q3 Earnings Lag Estimates, Up Y/Y

Edison International reported third-quarter 2021 adjusted earnings of $1.69 per share, which missed the Zacks Consensus Estimate of $1.76 per share by 4%. However, the bottom line improved 1.2% from the year-ago quarter’s earnings.

The company incurred GAAP loss of 90 cents per share from continuing operations compared with 76 cents in third-quarter 2020.

Total Revenues

Edison International's third-quarter revenues totaled $5,299 million, which surpassed the Zacks Consensus Estimate of $4,775 million by 11%. The top line rose 14.1% from the year-ago quarter’s $4,644 million.

Operational Highlights

In the reported quarter, total operating expenses increased 8% year over year to $5,427 million.

Purchased power and fuel costs rose 14.9%, while depreciation and amortization expenses increased 22.2%.

Operation and maintenance costs declined 2.1% year over year, while expensesassociated with wildfire related claims fell1.9%.

Operating loss amounted to $128 million in the third quarter of 2021, which improved from an operating loss of $379 million in the year-ago quarter.

Segment Results

Southern California Edison’s (SCE) third-quarter adjusted earnings were $1.84 per share compared with $1.73 a year ago. The increase in SCE’s core earnings can be attributed to higher revenues from the 2021 General Rate Case (GRC) final decision and higher Federal Energy Regulatory Commission revenues, partially offset by increased wildfire mitigation expenses.

The Parent and Other segment incurred a loss of 15 cents per share compared with the year-ago quarter’s loss of 6 cents.

Financial Update

As of Sep 30, 2021, Edison International's cash and cash equivalents amounted to $524 million compared with $87 million as of Dec 31, 2020.

Long-term debt was $23.34 billion as of Sep 30, 2021, higher than the 2020-end level of $19.63 billion.

Net cash outflow from operating activities during the nine months of 2021 was $416 million against cash inflow of $1,071 million in the prior-year quarter.

Total capital expenditures totaled $3,948 million during the nine months of 2021, up from $3,897 million a year ago.

2021 Guidance

The company narrowed its 2021 guidance. Its adjusted earnings are now projected to be $4.42-$4.52 per share, compared withthe prior guidance of $4.42-$4.62. The Zacks Consensus Estimate for earnings is currently pegged at $4.52 per share, which came in line with the higher end of the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Edison International has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 D. 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 indicates a downward shift. Notably, 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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