U.S. Markets close in 59 mins

Why Is Dominion Resources (D) Up 7.7% Since the Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Dominion Resources, Inc. D. Shares have added about 7.7% 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 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 catalysts.

Dominion Q4 Earnings Lag Estimates, Issues '17 Outlook

Dominion Resources Inc. reported fourth-quarter 2016 operating earnings of $0.99 per share, lagging the Zacks Consensus Estimate of $1.00 by a penny. Earnings were, however, within management’s guidance range of $0.90 to $1.10 per share. Operating earnings also increased 41.4% from 70 cents earned a year ago.

GAAP earnings were $0.73 per share compared with $0.60 in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to charges associated with future ash pond and landfill closures.

Full-year operating earnings came in at $3.80 per share, up 10.5% from the 2015 tally of $3.25. The year-over-year improvement was driven by growth projects in its regulated electric and gas service areas, lower capacity expenses, and investment tax credits from solar facilities. Reported earnings were, however, lower than the Zacks Consensus Estimate of $3.81.

Total Revenue

Dominion’s total revenue came in at $3,100 million, missing the Zacks Consensus Estimate of $3,391 million by 8.6%. However, quarterly revenues were up 20.2% year over year.

Full-year revenues inched up 0.3% from than the prior-year figure of $11.72 billion to $11.75 billion. The top line, however, missed the Zacks Consensus Estimate of $11.90 billion.

Highlights of the Release

Total operating expenses in the quarter increased 11.3% year over year to $2,032 million primarily due to a 10.8% surge in other operations and maintenance expenses.

Interest and related charges in the reported quarter were $292 million, up 28.6% from the year-ago quarter.

Dominion Virginia Power recorded 1% year-over-year growth in its customer base. Thanks to new customer additions, electricity sales volumes increased 6.8% to 19,545 Gwh.

Segment Update

Dominion Virginia Power
recorded net income of $121 million or 19 cents per share in the fourth quarter of 2016, up 12.1% year over year.

Dominion Energy recorded earnings of $243 million or 39 cents per share, up 42.1%.

Dominion Generation’s earnings were up 51.8% to $331 million or 53 cents per share.

Corporate and Others incurred a wider loss of $77 million or 12 cents.

Financial Update

D
ominion exited fourth-quarter 2016 with cash and cash equivalents of $261 million, down from $607 million as of Dec 31 2015.

Long-term debt as of Dec 31, 2016 was $30.2 billion compared with $23.5 billion at the end of 2015.

Cash from operating activities in 2016 was $4.12 billion, down 7.8% from $4.47 billion in the year-ago period.

Looking Ahead

In first-quarter 2017, Dominion expects to generate operating earnings of $0.90 to $1.10 per share. In the year-ago quarter, the company had reported earnings of $0.96.

For the full year, Dominion guided earnings in the range of $3.40 to $3.90 per share.

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.

Dominion Resources, Inc. Price and Consensus

 

Dominion Resources, Inc. Price and Consensus | Dominion Resources, Inc. Quote

VGM Scores

At this time, Dominion Resources' stock has an subpar Growth Score of 'D', though it is doing a bit better on the momentum front with a 'C'. Following the exact same course, the stock was allocated also 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.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Dominion Resources, Inc. (D): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research