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Exelon (EXC) Up 6.4% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Exelon (EXC). Shares have added about 6.4% in that time frame, outperforming the S&P 500.

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

Exelon's Q2 Earnings and Revenues Miss Estimates

Exelon Corporation’s second-quarter 2019 operating earnings of 60 cents per share lagged the Zacks Consensus Estimate of 63 cents by 4.8%. Also, the reported earnings were 15.5% lower than the year-ago figure of 71 cents.
 
The year-over-year decline in earnings was primarily due to lower realized energy prices.

On a GAAP basis, its quarterly earnings were 50 cents per share compared with 56 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $7,689 million lagged the Zacks Consensus Estimate of $7,894 million by 2.6%. The top line also declined 2.3% from the year-ago figure of $8,076 million. The year-over-year decline in revenues was due lower contribution from Generation, BGE and ComEd businesses.

Highlights of the Release

Exelon's total operating expenses decreased 3.6% year over year to $6,881 million. The decline in total expenses was due to lower power and fuel costs, as well as operating and maintenance expenses.

Interest expenses were $409 million, up 9.6% from $373 million in the year-ago quarter.

In the reported quarter, the company efficiently serviced more electric and natural gas customers than the year-ago period.

Hedges

Exelon's hedging program involves safeguarding of commodity risks for expected generation, typically on a ratable basis, over a three-year period. The proportion of expected generation hedged as of Jun 30 was 92-95% for 2019, 70-73% for 2020 and 40-43% for 2021.

Financial Highlights

Cash and cash equivalents were $735 million as of Jun 30, 2019 compared with $1,349 million on Dec 31, 2018.

Long-term debt was $31,909 million as of Jun 30, 2019 compared with $34,075 million on Dec 31, 2018.

Cash from operating activities in the first half of 2019 was $2,898 million compared with $3,869 million in the comparable year-ago period.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -6.14% due to these changes.

VGM Scores

At this time, Exelon has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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, Exelon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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