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OGE Energy (OGE) Up 2.9% Since Last Earnings Report: Can It Continue?

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Zacks Equity Research
·3 min read
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A month has gone by since the last earnings report for OGE Energy (OGE). Shares have added about 2.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

OGE Energy Q3 Earnings Miss Estimates, Sales Down Y/Y

OGE Energy's third-quarter 2020 earnings of $1.04 per share missed the Zacks Consensus Estimate of $1.09 by 4.6%. The bottom line, moreover, declined 16.8% from $1.25 registered in the year-ago quarter.

Including one-time items, the company reported GAAP earnings of 89 cents per share compared with earnings of $1.25 in the year-ago quarter.

Revenues

OGE Energy’s operating revenues of $702.1 million declined 7.1% from $755.4 million in the prior-year quarter. The year-over-year downside was primarily due to lower revenues from contracts with customers and other reduced revenues.

Operational Highlights

Total sales in the reported quarter amounted to 8.7 million megawatt-hours (MWh), lower than 9 million MWh in the prior-year quarter. Meanwhile, the company’s customer count inched up 1.1% to 865,259.

Cost of sales summed $209.1 million compared with $234 million in the prior-year quarter.

Total operating expenses declined 4.9% year over year to $235 million on account of lower depreciation and amortization expenses along with reduced operation and maintenance expenses.

Operating income declined 5.9% to $258 million from the year-ago quarter’s $274.3 million.

Interest expenses totaled $39.8 million in the third quarter, marginally up from $39.6 million a year ago.

Other Highlights

OGE Energy reported a net income of $177 million in the third quarter, down from the prior-year quarter’s $251 million.

The OG&E segment’s net income plunged 12.3% to $199 million from $227 million reported in the prior-year quarter. The decrease can be primarily attributed to less favorable weather in the quarter compared to the year-ago quarter.

The Natural Gas Midstream Operations segment posted third-quarter net income of $10 million compared with $29 million in the prior-year quarter. The decrease was primarily led by OGE's share of Enable's impairment of its investment in the Southeast Supply Header pipeline and lower net income from its gathering and processing business.

2020 Guidance

OGE Energy updated its 2020 earnings guidance in the range of $2.00-$2.06 per share. The Zacks Consensus Estimate for 2020 earnings is pegged at $2.06 per share, above the midpoint of the company’s guided 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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