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UIL Holdings Down to Strong Sell

Zacks Equity Research

Zacks Investment Research downgraded UIL Holdings Corporation (UIL) to a Zacks Rank #5 (Strong Sell) on Mar 22, 2013.

Why the Downgrade?

UIL Holdings financial results for the fourth quarter and year 2012 were reported on Feb 21, 2013. Earnings per share in the fourth quarter came in at 56 cents, up compared with 42 cents reported in the year-ago quarter. However, the results fell 9.7% short of the Zacks Consensus Estimate of 62 cents.

Talking of top-line, operating revenue of UIL Holdings in 2012 plummeted 5.3% year over year to $1,486.5 million. Despite the revenue fall, a decline in operating expenses supported a 5.1% increase in operating income.  

For 2013, management expects higher pension expenses as well as a decline in CTA earnings to negatively impact earnings per share for the year. Taking this into account, the Zacks Consensus Estimate for UIL Holdings has declined 5.6% to $2.18 for 2013 in the last 60 days while that for 2014 has plummeted 2.1% to $2.38 per share.

Also, negative earnings surprise in three out of four trailing quarters with an average of -11.8%, has raised concerns over the future performances of the company. Currently, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of -6.9% for the first quarter of 2013 and -1.3% for 2014.    

Other Stocks to Consider

Other stocks to watch out for in the industry are Brookfield Infrastructure Partners L.P. (BIP), Edison International (EIX) and Huaneng Power International, Inc. (HNP), each with a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on UIL

Read the Full Research Report on EIX

Read the Full Research Report on BIP

Read the Full Research Report on HNP

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