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Eversource (ES) Up 2.9% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Eversource Energy (ES). Shares have added about 2.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Eversource due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Eversource’s Q1 Earnings and Revenues Beat Estimates

Eversource Energy reported first-quarter 2022 operating earnings of $1.30 per share, which surpassed the Zacks Consensus Estimate of $1.22 by 6.6%. The bottom line improved 13% year over year. The year-over-year improvement in earnings was due to strong contributions from all the segments.

GAAP earnings per share for the first quarter were $1.28, up 23.3% from $1.06 reported in the year-ago period. The difference between GAAP and operating earnings per share was due to one-time acquisition and settlement charges.

Revenues

First-quarter revenues of $3,471.3 million surpassed the Zacks Consensus Estimate of $2,987 million by 16.2%. Total revenues improved 22.8% from the year-ago figure of $2,825.9 million.

Highlights of the Release

Operating expenses increased nearly 25.4% year over year to $2,808.3 million. Operating income was up 13.2% from the prior-year quarter to $663.1 million. Interest expenses increased 11.3% from the prior-year quarter to $153.3 million.

Net income for the quarter under review was $445.3 million, up 21% from $368 million recorded in the year-ago period.

Segmental Performance

Electric Distribution: Earnings from this segment were $140.9 million, up 20.1% from the prior-year quarter. The improvement was primarily due to higher revenues and lower pension costs.

Electric Transmission Earnings from this segment were $148.5 million, up 9.7% from the prior-year quarter. The upside was due to increased investment in Eversource’s transmission facilities.

Natural Gas Distribution: Earnings from this segment for the first quarter were $164 million, up 11.1% from the prior-year period. The upside was due to higher revenues and lower pension costs.

Water Distribution: Earnings from this segment were $3.7 million, up 2.8% from the year-ago quarter.

Eversource Parent & Other Companies: The segment’s loss was $8.4 million wider than loss of $7.5 million in the year-ago quarter.

Guidance

Eversource Energy reiterated its earnings guidance for 2022 in the range of $4.00-$4.17 per share. The midpoint of management’s earnings guidance is nearly $4.1, on par with the Zacks Consensus Estimate of $4.10 for the year.

The company also reaffirmed its expectation for long-term earnings per share growth rate from the existing core regulated businesses in the upper half of 5-7%, using the $3.86 earned in 2021 as a base.

Eversource plans to invest $3.89 billion in 2022. Its total capital expenditure for the 2022-2026 time period is expected to be $18.1 billion, which will assist Eversource in achieving its carbon-neutral target by 2030.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Eversource has a nice Growth Score of B, though it is lagging a lot 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Eversource is part of the Zacks Utility - Electric Power industry. Over the past month, Xcel Energy (XEL), a stock from the same industry, has gained 3.7%. The company reported its results for the quarter ended March 2022 more than a month ago.

Xcel reported revenues of $3.75 billion in the last reported quarter, representing a year-over-year change of +5.9%. EPS of $0.70 for the same period compares with $0.67 a year ago.

For the current quarter, Xcel is expected to post earnings of $0.59 per share, indicating a change of +1.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.2% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Xcel. Also, the stock has a VGM Score of D.


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