A month has gone by since the last earnings report for Eversource Energy (ES). Shares have lost about 6.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Eversource due for a breakout? 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 catalysts.
Eversource Q2 Earnings In Line, Revenues Miss Estimates
Eversource Energy reported second-quarter 2020 operating earnings of 76 per share, on par with the Zacks Consensus Estimate. However, the reported earnings improved 2.7% year over year. The year-over-year improvement in earnings was due to strong execution of its operations amid the pandemic.
Second-quarter revenues of $1,953 million lagged the Zacks Consensus Estimate of $2,042 million by 4.4%. However, total revenues improved 3.7% from the year-ago figure of $1,884 million.
Highlights of the Release
Operating expenses decreased 12.3% year over year to $1,519.5 million. Operating income was up 187.4% from the prior-year quarter to $433.7 million. Interest expenses increased 1.2% year over year to $134.3 million.
Net income in the quarter under review was $252.2 million, up substantially from $31.4 million recorded in the year-ago period.
Electric Distribution: Earnings from this segment were $115 million, up 9.1% from the prior-year quarter. The upside was primarily attributed to higher revenues, partially offset by increased depreciation, operation and maintenance, as well as interest expenses.
Electric Transmission: Earnings of the segment were up 10.7% year over year to $129.5 million. The upside was due to increased investment in Eversource’s transmission facilities.
Natural Gas Distribution: This segment’s income was $3.3 million against a loss of $1.8 million in the year-ago quarter. The year-over-year improvement was due to higher revenues, partially offset by increased operation and maintenance expenses, as well as high depreciation costs.
Water Distribution: Earnings from this segment were $10.4 million, up 30% from $8 million in the year-ago quarter. The improved results were primarily due to higher revenues and lower depreciation expense.
Eversource Parent & Other Companies: The segment’s loss was $2.1 million against earnings of $7.3 million in the year-ago quarter.
Eversource reaffirmed its 2020 earnings guidance in the range of $3.60-$3.70 per share. The midpoint of management’s 2020 EPS guidance is $3.65, which is higher than the current Zacks Consensus Estimate of $3.62 for the period.
The company expects long-term earnings to improve 5-7% from contribution from the existing core regulated businesses.
Eversource reiterated its capital expenditure view of $14.2 billion for the 2020-2024 time period.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
Currently, Eversource has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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