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Why Is OGE Energy (OGE) Up 4.6% Since the Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for OGE Energy Corporation OGE. Shares have added about 4.6% 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 the most recent earnings report in order to get a better handle on the important drivers.

OGE Energy Q1 Earnings Beat Estimates, Revenues Up Y/Y

OGE Energy reported first-quarter 2017 earnings of $0.18 per share, which surpassed the Zacks Consensus Estimate of $0.17 by 5.9%. Reported earnings also improved 38.5% year over year.

Revenues

OGE Energy’s operating revenues of $456 million in first-quarter 2017 rose 5.3% from the prior-year figure of $433.1 million.

Operational Highlights

Total sales in the reported quarter amounted to 6.2 million megawatt-hours (MWh), down from 6.5 million MWh in the prior-year quarter. This decline was due to lower system as well as integrated market sales. The company’s customer count increased by 8,414 or 1%.

Cost of sales in the reported quarter was $208.7 million, up 17.3%.

Total operating expenses in the quarter under review decreased 6.4% year over year to $203.5 million mainly due to lower depreciation and amortization expenses as well as taxes other than income expenses. As a result, operating income increased 15.6% to $43.8 million from the year-ago figure of $37.9 million.

Interest expenses totaled $35 million in the reported quarter, down from $36.3 million a year ago.

Other Highlights of the Release

OGE Energy reported net income of $36 million in this quarter, up 42.9% from the prior-year figure of $25.2 million.

OG&E: OG&E's net income increased 166.7% year over year to $16 million in the quarter. The upside was mainly due to lower depreciation expenses related to the reduction in depreciation rates as directed in the Oklahoma Corporation Commission's final order.

Natural Gas Midstream Operations: The segment posted net income of $20 million in the first quarter compared with $18 million a year ago. Increased gross margin and cost controlling measures in the gathering and processing business segment primarily contributed to the improvement in net income.

Guidance

OGE Energy has revised its guidance for 2017. The company expects 2017 consolidated earnings per share to be in the lower end of $1.93–$2.09.

OG&E, the regulated utility, has reaffirmed to earn in the lower end of $1.58–$1.70 per share.

How have estimates been moving since then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

OGE Energy Corporation Price and Consensus

 

OGE Energy Corporation Price and Consensus | OGE Energy Corporation Quote

VGM Scores

At this time, OGE Energy's stock has an average Growth Score of 'C', while it is lagging a bit on the momentum front with 'D'. Following a similar course, the stock was allocated also 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.

Based on our scores, the stock is suitable for value and growth investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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