Utilities Earnings Decent in Q2: ETFs in Focus
The utilities sector has come up with mostly decent results this earnings season. All of S&P companies in the sector have reported. About 74.1% beat on bottom line and 92.6% surpassed the top-line estimates, per the Earnings Trends issued on Aug 10, 2022.
Earnings in Focus
In late July, NextEra Energy, Inc. NEE reported second-quarter 2022 adjusted earnings of 81 cents per share, which beat the Zacks Consensus Estimate of 75 cents by 8%. The bottom line was also up 14.1% from the prior-year quarter. This year-over-year improvement was due to the solid performance of Florida Power & Light Company and NextEra Energy Resources.
GAAP earnings for the second quarter were 70 cents compared with earnings of 13 cents, in the year-ago period. For the second quarter, NextEra’s operating revenues were $5,183 million, which lagged the Zacks Consensus Estimate of $5,681 million by 8.8%. The top line improved 31.9% year over year.
In early August, Duke Energy Corporation DUK reported second-quarter 2022 adjusted earnings of $1.14 per share, which beat the Zacks Consensus Estimate of $1.10 by 3.6%. The bottom line however dropped 0.9% year over year.
This year-over-year decline is attributable to higher operation and maintenance expense due to plant outage timing in the Electric Utilities and Infrastructure segment along with higher interest expense and the impact of GIC minority interest. Including one-time adjustments also, the company reported GAAP earnings of $1.14 per share compared with the year-ago quarter’s earnings of 96 cents.
Total operating revenues came in at $6,685 million, which improved 16.1% from $5,758 million a year ago. The reported top-line figure also surpassed the Zacks Consensus Estimate of $6,022.6 million by 11%.
In early August, Dominion Energy Inc. D has reported second-quarter 2022 operating earnings of 77 cents per share, in line with the Zacks Consensus Estimate. Quarterly earnings were within the company’s guided range of 70-80 cents per share. Operating earnings improved 1.3% year over year. The GAAP loss for the second quarter was 58 cents per share compared with a loss of 33 cents in the year-ago quarter.
Dominion Energy’s total revenues were $3,596 million, which surpassed the Zacks Consensus Estimate of $3,386 million by 6.2%. Revenues improved 18.4% from $3,038 million in the year-ago quarter. Dominion has given the third-quarter 2022 operating earnings guidance between 98 cents and $1.13 per share. Notably, the company reported earnings of $1.11 per share in the year-ago period. The mid-point of the guided range is $1.05, lower than the current Zacks Consensus Estimate of $1.16 per share for the same period.
Utility ETFs in Focus
In the current scenario, let’s discuss ETFs that have relatively high exposure to the above-mentioned utility companies:
The Utilities Select Sector SPDR Fund XLU
The fund tracks the Utilities Select Sector Index. It comprises 29 holdings, with the above-mentioned companies carrying about 30% weight. Its AUM is $17.17 billion and expense ratio is 0.10%. The fund has gained 10% past month (as of Aug 12, 2022). It carries a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook.
Vanguard Utilities ETF VPU
The fund tracks the MSCI US Investable Market Utilities 25/50 Index and includes stocks of companies that distribute electricity, water, or gas or that operate as independent power producers. It comprises about 60 holdings, with the above-mentioned companies constituting 26.5%. Its AUM is $6.09 billion and expense ratio is 0.10%. It has increased 10.2% past month. It carries a Zacks ETF Rank #3, with a Medium-risk outlook.
iShares U.S. Utilities ETF IDU
The fund tracks the Russell 1000 Utilities RIC 22.5/45 Capped Index, providing exposure to U.S. companies that supply electricity, gas and water. It comprises 44 holdings, with the above-mentioned companies constituting 26%. Its AUM is $1.0 billion and expense ratio is 0.41%. It has increased about 11% past month. The fund carries a Zacks ETF Rank of 3, with a Medium-risk outlook.
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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Duke Energy Corporation (DUK) : Free Stock Analysis Report
Dominion Energy Inc. (D) : Free Stock Analysis Report
Vanguard Utilities ETF (VPU): ETF Research Reports
iShares U.S. Utilities ETF (IDU): ETF Research Reports
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