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WEC Energy (WEC) Up 3.4% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for WEC Energy Group, Inc. WEC. Shares have added about 3.4% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted 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.

WEC Energy Q1 Earnings, Revenues Surpass Estimates

WEC Energy Group reported first-quarter 2017 adjusted earnings of $1.12 per share, beating the Zacks Consensus Estimate of $1.06 by 5.7% and the year-ago figure of $1.09 by 2.7%.

Revenues

WEC Energy’s total revenue amounted to $2,304 million, beating the Zacks Consensus Estimate of $2,188 million by 5.3%. Reported revenues also surpassed the year-ago figure of $2,194.8 million by 5.0%.

Highlights of the Release

Residential use of electricity in first-quarter 2017 was down 2.1% year over year. Electricity used by small commercial and industrial customers was flat year over year. Electricity used by large commercial and industrial customers, excluding the iron ore mines in Michigan's Upper Peninsula, decreased by 1.2%.

Total operating expenses in the quarter under review increased nearly 5.1% year over year to $1,687.2 million, mainly due to higher cost of sales.

Operating income in the reported quarter was $617.3 million, up 4.8% from $589.3 million a year ago.

The company’s interest expenses in the first quarter increased 3.8% year over year to $104.7 million.

WEC Energy's utilities expanded the customer base in the reported quarter. At the end of first-quarter 2017, the company had an additional 8,000 electric and 23,000 natural gas customers compared with the year-ago quarter.

Financial Position

As of Mar 31, 2017, WEC Energy had cash and cash equivalents of $45.7 million compared with $37.5 million as of Dec 31, 2016.

As of Mar 31, 2017, WEC Energy had long-term debts of $9.1 billion, almost flat with the 2016-end level.

In the first quarter of 2017, cash flow from operating activities was $714.6 million, up 2.7% from $695.9 million in the year-ago period.

WEC Energy’s capital expenditure in the first quarter of 2017 was $329.7 million, up 5.7% from the prior-year quarter.

How Have Estimates Been Moving Since Then?

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

WEC Energy Group, Inc. Price and Consensus

 

WEC Energy Group, Inc. Price and Consensus | WEC Energy Group, Inc. Quote

VGM Scores

At this time, WEC Energy's stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.

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

Based on our scores, the stock is primarily suitable for growth investors while also being suitable for those looking for momentum and to a lesser degree value.

Outlook

The Zacks Consensus Estimate has declined over the last 30 days. The stock has a Zacks Rank #4 (Sell). We expect below average returns from the stock in the next few months.


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