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Why Is Eversource (ES) Up 10.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Eversource Energy (ES). Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Eversource due for a pullback? 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 drivers.

Eversource Q1 Earnings In Line, Revenues Miss Estimates

Eversource Energy reported first-quarter 2020 operating earnings of $1.02 per share, on par with the Zacks Consensus Estimate. However, the reported earnings improved 4.9% year over year.
 
Total Revenues


First-quarter revenues of $2,374 million lagged the Zacks Consensus Estimate of $2,538 million by 6.5%. Total revenues also dropped 1.7% from the year-ago figure of $2,415.8 million.

Highlights of the Release

Operating expenses decreased 4.5% year over year to $1,834.6 million, primarily owing to lower purchased power, fuel and transmission expenses.

Operating income was up 8.9% from the prior-year quarter to $539.1 million. Interest expenses increased 2.3% year over year to $134.7 million in the quarter.

Net income in the quarter under review was $334.8 million, up 8.5% from $308.7 million recorded in the year-ago period.

Segmental Performance

Electric Distribution
: Earnings from this segment were $130.1 million, up 8.3% from the prior-year quarter. The upside was primarily attributed to higher distribution revenues and lower storm restoration costs, partially offset by increased depreciation cost, and operations and maintenance (O&M) expense.

Electric Transmission: Earnings of the segment were up 7.3% year over year to $126.8 million. The upside was due to increased investment in Eversource’s transmission facilities.

Natural Gas Distribution: This segment’s earnings were up 10.3% year over year to $84.4 million, partially offset by increase in O&M and depreciation expenses.

Water Distribution: Earnings from this segment were $2.1 million, up 133.3% from $0.9 million in the year-ago quarter.

Eversource Parent & Other Companies: The segment’s loss was $5 million compared with a loss of $7 million in the year-ago quarter. The narrower loss was due to lower interest expenses.

Financial Highlights

Cash and cash equivalents were $47.4 million as of Mar 31, 2020, up from $15.4 million on Dec 31, 2019.

Long-term debt was $13,898.6 million as of Mar 31, 2020, higher than $13,770.8 million on Dec 31, 2019.

Guidance

Eversource reaffirmed its 2020 earnings guidance in the range of $3.60-$3.70 per share. The midpoint of management’s 2020 EPS guidance is $3.65, which is on par with the current Zacks Consensus Estimate of $3.65 for the period.

The company expects long-term earnings to improve 5-7% through 2024 from the 2019 base of $3.45.


 

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, Eversource has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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