A month has gone by since the last earnings report for Eversource Energy (ES). Shares have added about 4.1% 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 its most recent earnings report in order to get a better handle on the important drivers.
Eversource Earnings and Revenues Beat Estimates in Q2
Eversource Energy delivered second-quarter 2018 operating earnings of 76 cents per share, surpassing the Zacks Consensus Estimate of 75 cents by 1.3%. The bottom line also improved 5.6% year over year.
Eversource’s second-quarter revenues of $1,854 million topped the Zacks Consensus Estimate of $1,813 million by 2.3% and also improved 5.2% from the year-ago figure of $1,763 million.
Highlights of the Release
In the reported quarter, natural gas distribution increased 11.3% to 18,932 million cubic feet of gas.
Operating expenses increased nearly 11.3% year over year to $1,462.5 million, primarily owing to higher expenses from purchased power, fuel and transmission plus depreciation expenses.
Operating income was down 12.7% to $391.4 million and interest expenses were up 17.8% year over year to $126.4 million.
Net income in the quarter under review was $244.7 million, up 5.2% from the year-ago period’s tally.
Electric Distribution: Earnings from this segment were down 16.9% to $101.3 million. This downside was on account of divestiture of New Hampshire generation assets, higher property tax expense and the timing of electric revenues.
Electric Transmission: This segmental bottom line increased 16.9% year over year to $112.7 million. The upside was primarily attributable to higher level of investment in Eversource’s electric transmission system.
Natural Gas Distribution: Here, the earnings improved 11.1% to $5 million. The year-over-year rise was primarily due to cold weather in 2018.
Water Distribution: Eversource Energy’s water distribution segment, created after Eversource acquired Aquarion Water Company in December 2017, earned $7.2 million in second-quarter 2018.
Eversource Parent & Other Companies: The segment earned $16.6 million compared with the year-ago quarter’s bottom lines of $7.9 million.
Eversource reaffirmed 2018 earnings guidance in the range of $3.20-$3.30. Long-term earnings growth is projected in the 5-7% band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Eversource has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, 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 D. 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 value based on our style scores.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Interestingly, 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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