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Exelon (EXC) Q4 Earnings Lag Estimates, Issues '17 Outlook

Zacks Equity Research

Exelon Corporation EXC reported fourth-quarter 2016 adjusted operating earnings of 44 cents per share, lagging the Zacks Consensus Estimate of 45 cents by a penny. Quarterly earnings were also 15.8% higher than year-ago tally of 38 cents.

The bottom-line improvement was driven by regulatory rate hikes, favorable weather and the positive impact of lower nuclear outage days at the Generation segment.

On a GAAP basis, quarterly earnings were 22 cents per share, compared with 33 cents a year ago. The difference between GAAP and adjusted operating earnings was due to the combined impact of hedging activities, impairment of assets, asset retirement obligation, other one-time charges resulting in a net charge of 22 cents.

Full-year adjusted earnings came in at $2.68 per share, up 7.6% from $2.49 in 2015 and in line with the Zacks Consensus Estimate of $2.68. Exelon’s earnings were with management’s guidance range of $2.55 to $2.75 per share.

Total Revenue

Exelon's total operating revenue of $8,052 million missed the Zacks Consensus Estimate of $8,062 million by 0.1%. However, quarterly revenues increased 20.5% year over year.

Full-year revenues amounted to $31,905 million, up 9.1% from $29,237 million in 2015. The Zacks Consensus Estimate was $30,000 million.

Quarterly Highlights

Exelon's total operating expenses increased 19.6% year over year to $7,112 million. The increase in operating expenses was primarily due to higher purchased power and fuel expenses, and operating and maintenance expenses.

Exelon Corporation Price, Consensus and EPS Surprise

 

Exelon Corporation Price, Consensus and EPS Surprise | Exelon Corporation Quote

The company reported operating income of $940 million in the quarter, up 26.3% from $744 million a year ago.

Interest expenses of $356 million were 28.1% higher than the year-ago quarter.

Exelon’s Commonwealth Edison Company (ComEd) was serving nearly 3.97 million electric customers in the fourth quarter, up 1.3% year over year.

Financial Position

As of Dec 31, 2016, Exelon's cash and cash equivalents were $635 million, compared with $6,502 million at the end of 2015.

Long-term debt as of Dec 31, 2016 was $31,575 million, up from $23,645 million as of Dec 31, 2015.

In 2016, net cash flow from operating activities was $8,434 million, compared with $7,616 million in the year-ago period. During the same period, Exelon's capital expenditure was $8,565 million, compared with $7,624 million in 2015.

Hedges

Exelon's hedging program involves hedging of commodity risks for expected generation, typically on a ratable basis, over a three-year period. The proportion of expected generation hedged as of Dec 31, 2016, was 91–94% for 2017, 56–59% for 2018, and 28–31% for 2019.

Looking Ahead

Exelon expects its 2017 earnings in the range to $2.50 to $2.80 per share.

Peer Releases

American Electric Power Co., Inc. AEP reported fourth-quarter 2016 operating earnings of  67 cents per share, beating the Zacks Consensus Estimate of 55 cents by 21.8%.

NextEra Energy, Inc. NEE reported fourth-quarter 2016 adjusted earnings of $1.21 per share, missing the Zacks Consensus Estimate of $1.29 by 6.2%. Reported earnings were, however, up 3.4% year over year.

Dominion Resources Inc. D reported fourth-quarter 2016 operating earnings of 99 cents per share, lagging the Zacks Consensus Estimate of $1.00 by a penny.

Zacks Rank

Exelon Corporation currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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