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Why Is DTE Energy (DTE) Up 2.4% Since Last Earnings Report?

Zacks Equity Research
Is (LXFR) Outperforming Other Industrial Products Stocks This Year?

It has been about a month since the last earnings report for DTE Energy (DTE). Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is DTE Energy 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 drivers.

DTE Energy Beats on Q2 Earnings, Hikes '18 EPS View

DTE Energy reported second-quarter 2018 operating earnings per share of $1.36, which outpaced the Zacks Consensus Estimate of $1.07 by 27.1%. The reported figure also improved 27.1% from the year-ago quarter’s figure of $1.07.

On a GAAP basis, reported earnings came in at $1.29 per share compared with 99 cents in the prior-year quarter.

Highlights of the Release

DTE Energy announced that it is accelerating its plans to produce cleaner energy in Michigan, targeting at least a 50% Clean Energy Goal by 2030. Michigan regulators also approved DTE Energy's request to build a highly-efficient natural gas power plant. This new power plant is likely to replace three existing coal-fired plants, which are expected to retire by 2023.

This latest move is expected to be a significant step toward achieving the company’s target of carbon emission reduction by more than 80% within 2050.

Operating net income in the reported quarter totaled $247 million compared with $191 million in the year-ago quarter.

Segmental Details

Utility Operations

DTE Electric:  The segment’s operating earnings were $163 million, up from $148 million in the prior-year quarter.

DTE Gas: The segment generated operating earnings of $14 million compared with $1 million in the prior-year quarter.

Non-Utility Operations: The operating earnings from Non-Utility operations were $111 million compared with $74 million in the prior-year quarter.

Guidance

DTE Energy raised its 2018 operating earnings per share guidance from the range of $5.57-$5.99 to $5.94-$6.32.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, DTE Energy has a subpar Growth Score of D, however its Momentum is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Our style scores indicate that the stock is more suitable for value investors than momentum investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of this revision looks promising. It comes with little surprise DTE Energy has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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