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Exelon (EXC) Down 2.2% Since Last Earnings Report: Can It Rebound?

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  • EXC

It has been about a month since the last earnings report for Exelon (EXC). Shares have lost about 2.2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is Exelon due for a breakout? 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 drivers.

Exelon's Q3 Earnings Lag Estimates, Revenues Beat

Exelon Corporation’s third-quarter 2021 earnings of $1.09 per share missed the Zacks Consensus Estimate by a penny.

The bottom line, however, increased 4.8% from the year-ago earnings of $1.04 per share. The year-over-year improvement in earnings was primarily due to rate adjustments resulting from continued investments at the utilities to improve the reliability and services for customers.

On a GAAP basis, quarterly earnings were $1.23 per share compared with 51 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $8,910 million surpassed the Zacks Consensus Estimate of $8,579 million by 3.9%. The top line also improved 0.6% from the year-ago figure of $8,853 million.

Highlights of the Release

Exelon's total operating expenses decreased nearly 12% year over year to $7,117 million.

Interest expenses were $397 million, down 1.7% from the year-ago quarter.

Exelon-operated nuclear plants at ownership achieved a 96% capacity factor for the quarter, on par with the year-ago level.

Planned Separation

On Feb 25, 2021, Exelon announced that its board of directors approved a plan to separate the utilities business, comprising six regulated electric and gas utilities along with Exelon Generation, its competitive power generation, and customer-facing energy businesses. This will create two publicly-traded companies with the necessary resources to best serve customers, and help the company sustain long-term investments as well as operating excellence.

On Aug 24, 2021, the FERC approved the planned separation of Exelon Generation and on Sep 23, 2021, the company received a private letter ruling from the Internal Revenue Service (“IRS”) confirming the tax-free treatment of the planned separation. Subject to necessary approvals, it expects the separation to complete in first-quarter 2022.

Hedges

Exelon's hedging program involves the safeguarding of commodity risks for expected generation. As of Sep 30, 2021, the proportion of expected generation hedged is 96-99% for 2021.

Financial Highlights

Cash and cash equivalents were $2,957 million as of Sep 30, 2021 compared with $663 million on Dec 31, 2020.

Long-term debt was $35,269 million as of Sep 30, 2021 compared with $35,093 million on Dec 31, 2020.

Cash provided from operating activities for the first nine months of 2021 was $4,141 million compared with $4,222 million in the corresponding period of 2020.

Guidance

Exelon narrowed its 2021 earnings guidance to the range of $2.70-$2.90 from $2.60-$3.00 per share. The midpoint of the revised guided range is $2.80, lower than the Zacks Consensus Estimate of $2.81 per share for the period.

The company plans to invest $6.6 billion in 2021 to strengthen operations.

 

How Have Estimates Been Moving Since Then?

Estimates review followed an upward path over the past two months.

VGM Scores

At this time, Exelon has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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