Eversource (ES) Up 3.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Eversource Energy (ES). Shares have added about 3.7% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Eversource Energy Q4 Earnings and Revenues Lag Estimates
Eversource Energy reported fourth-quarter 2023 adjusted earnings of 95 cents per share, which missed the Zacks Consensus Estimate of 97 cents by 2.1%. However, the bottom line increased 24% from the year-ago quarter’s figure of 92 cents.
ES reported earnings of $4.34 for 2023 compared with $4.09 per share in 2022, which reflects a year-over-year increase of 6.1%.
Total Revenues
ES’ fourth-quarter revenues of $2.69 billion missed the Zacks Consensus Estimate of $3.15 billion by 16.3%. Total revenues also declined 13.2% from the year-ago quarter’s figure of $3.03 billion.
Highlights of the Release
After selling South Fork Wind and Revolution Wind to Global Infrastructure Partners, Sunrise Wind to orsted and the uncommitted lease area last year, Eversource's offshore wind business can now be fully exited. Eversource will maintain its existing tax equity stake in South Fork Wind.
Segmental Performance
Electric Transmission: Earnings from this segment totaled $167 million, up 18.6% from the prior-year quarter’s level. The increase was primarily due to a higher level of investment in Eversource’s electric transmission system.
Electric Distribution: Earnings from this segment amounted to $103.7 million, up 5.9% year over year. This was due to higher revenues from investments in the distribution system and a base distribution rate increase for Eversource’s Massachusetts electric business.
Natural Gas Distribution: Earnings from this segment totaled $76.5 million, down 12.2% from the prior-year quarter’s level. This was due to higher depreciation and operation and maintenance expenses.
Water Distribution: Earnings from this segment amounted to $5.7 million, down 23% from the year-ago quarter’s figure.
Eversource Parent & Other Companies: The segment reported a loss of $19.4 million in the fourth quarter of 2023, marking an improvement from the year-ago quarter's reported loss of $12.9 million. This primarily reflects a lower effective tax rate, partially offset by higher interest expenses.
Guidance
Eversource expects its 2024 earnings in the band of $4.50-$4.67 per share. The Zacks Consensus Estimate is pegged at $4.51 per share, lower than $4.58, the midpoint of the company’s guided range.
The company’s expectations for the long-term EPS growth rate from existing core regulated businesses are within 5% and 7% through 2028, using the $4.34 per share earned in 2023 as a base.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a flat path over the past two months.
VGM Scores
At this time, Eversource has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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
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 belongs to the Zacks Utility - Electric Power industry. Another stock from the same industry, FirstEnergy (FE), has gained 3.1% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
FirstEnergy reported revenues of $3.15 billion in the last reported quarter, representing a year-over-year change of -1%. EPS of $0.62 for the same period compares with $0.50 a year ago.
For the current quarter, FirstEnergy is expected to post earnings of $0.71 per share, indicating a change of +18.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +28.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for FirstEnergy. Also, the stock has a VGM Score of C.
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