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OGE Energy (OGE) Down 0.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for OGE Energy (OGE). Shares have lost about 0.4% in that time frame, outperforming the S&P 500.

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

OGE Energy Q1 Earnings Miss Estimates, Down Y/Y

OGE Energy’s first-quarter 2019 earnings of 24 cents per share missed the Zacks Consensus Estimate of 26 cents by 7.7%. The bottom line also declined 11.1% from $1.48 registered in the year-ago quarter. The downturn can be attributed to higher expenses incurred in relation to timing of certain projects.

Revenues

OGE Energy’s operating revenues of $490 million slipped 0.5% from $492.7 million in the prior-year quarter. The downside was primarily due to year-over-year lower residential, commercial, public authorities and street light as well as integrated market revenues.

Operational Highlights

Total sales in the reported quarter amounted to 7 million megawatt-hours (MWh), higher than 6.8 million MWh in the prior-year quarter. Meanwhile, the company’s customer count inched up 1% to 852,141.

Cost of sales summed $212.6 million compared with $210.5 million in the prior-year quarter.

Total operating expenses rose 5.6% year over year to $227.7 million on account of higher operation and maintenance expenses, depreciation and amortization expenses as well as higher taxes (other than income).

Consequently, operating income decreased 25.4% to $49.7 million from the year-ago quarter’s $66.6 million.

Interest expenses totaled $34.6 million in the first quarter, down from $38.6 million a year ago.

Other Highlights of the Release

OGE Energy reported net income of $47 million in the first quarter, down from the prior-year figure of $55 million.

OG&E: The segment’s net income declined 35.5% to $20 million from $31 million from the prior-year quarter.

Natural Gas Midstream Operations: The segment posted first-quarter net income of $22 million compared with $24 million in the prior year.

Guidance

OGE Energy reaffirmed its 2019 earnings guidance. The company still expects its earnings to lie in the range of $2.05-$2.20 per share. The current Zacks Consensus Estimate for the company’s 2019 earnings, pegged at $2.14, lies just above the mid-point of the company 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.

VGM Scores

Currently, OGE Energy has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

OGE Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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