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OGE Energy (OGE) Up 0.3% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for OGE Energy (OGE). Shares have added about 0.3% in that time frame, underperforming the S&P 500.

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

OGE Energy Q2 Earnings Surpass Estimates, Down Y/Y

OGE Energy Corp.’s second-quarter 2019 earnings of 50 cents per share outpaced the Zacks Consensus Estimate of 48 cents by 4.2%. The bottom line, however, declined 9% from 55 cents registered in the year-ago quarter. This downturn can be primarily attributed to the company’s dismal top-line performance in the reported quarter.

Revenues

OGE Energy’s operating revenues of $513.7 million declined 9.4% from $567 million in the prior-year quarter. The downside was primarily due to year-over-year lower residential, commercial, industrial, public authorities and street light as well as system sales revenues.

Operational Highlights

Total sales in the reported quarter amounted to 6.9 million megawatt-hours (MWh), lower than 7.4 million MWh in the prior-year quarter. Meanwhile, the company’s customer count inched up 1% to 853,500.

Cost of sales summed $178.7 million compared with $208.7 million in the prior-year quarter.

Total operating expenses rose 2% year over year to $225 million on account of higher operation and maintenance expenses as well as depreciation and amortization expense.

Consequently, operating income decreased 20.1% to $110 million from the year-ago quarter’s $137.7 million.

Interest expenses totaled $35.9 million in the second quarter, down from $40.9 million a year ago.

Other Highlights

OGE Energy reported net income of $100 million in the second quarter, down from the prior-year figure of $111 million.

OG&E: The segment’s net income declined 18.5% to $75 million from $92 million registered in the prior-year quarter.

Natural Gas Midstream Operations: The segment posted second-quarter net income of $27 million compared with $22 million in the prior year.

Guidance

OGE Energy reiterated its 2019 earnings guidance. The company still expects its earnings to be in the $2.05-$2.20 per share range. The Zacks Consensus Estimate for full-year earnings is pegged at $2.14, just above the mid-point of the company’s projected range.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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