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It has been about a month since the last earnings report for WEC Energy Group (WEC). Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WEC 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 the most recent earnings report in order to get a better handle on the important catalysts.
WEC Energy’s Q3 Earnings Beat, 2020 EPS View Up
WEC Energy Group delivered third-quarter 2020 earnings per share of 84 cents, which beat the Zacks Consensus Estimate of 76 cents by 10.5%. The bottom line also improved 13.5% from the year-ago quarter’s 74 cents per share. This year-over-year outperformance was led by operational efficiency, the warmer-than-normal weather along with reopening of economic activities.
Total revenues of $1,651 million missed the Zacks Consensus Estimate of $1,681 million by 1.8%. However, the top line improved 2.7% from $1,608 million in the year-ago quarter.
Highlights of the Release
Residential use of electricity in the third quarter rose 7.1% year over year. Electricity consumption by small commercial and industrial customers declined 2.5% year over year. Electricity used by large commercial and industrial customers excluding iron ore mines dipped 5.4% on a year-over-year basis. On a weather adjusted basis, retail deliveries of electricity excluding the iron ore mine slid 1.5%.
Total natural gas volume declined 6.4% in the third quarter.
Total operating expenses for the third quarter amounted to $1,280.8 million, down 1.3% from the year ago quarter’s $1,297.1 million.
Operating income came in at $370.2 million, increasing 19.1% from the prior-year period’s $310.9 million.
At the end of the third quarter of 2020, the company was serving additional 11,000 electric and 32,000 natural gas customers from the year-ago quarter's levels.
As of Sep 30, 2020, WEC Energy had cash and cash equivalents of $13.1 million compared with $37.5 million as of Dec 31, 2019.
As of Sep 30, 2020, the company had long-term debt of $11,652.5 million compared with $11,211 million on Dec 31, 2019.
The company’s net cash provided by operating activities at the end of the first nine months of 2020 was $1,949.7 million compared with $1,840.7 million at the end of the comparable period of 2019.
Capital expenditure at the end of the first nine months of this year was $1,618.7 million compared with $1,511.5 million at the end of the year-ago period.
The company narrowed full-year earnings per share projection to the range of $3.74-$3.76 from the prior expectation of $3.71-$3.75. The upper end of this current guided range is in line with the Zacks Consensus Estimate.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, WEC Energy has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, WEC 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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