Why Is WEC Energy (WEC) Down 4.8% Since Last Earnings Report?
It has been about a month since the last earnings report for WEC Energy Group (WEC). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WEC Energy due for a breakout? 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.
WEC Energy Q2 Earnings Beat Estimates, Revenues Lag
WEC Energy Group reported second-quarter 2023 earnings of 92 cents per share, which beat the Zacks Consensus Estimate of 85 cents by 8.24%. The bottom line also increased 1.1% from the year-ago quarter’s figure of 91 cents.
Revenues
Operating revenues of $1,830 million missed the Zacks Consensus Estimate of $2,166 million by around 15.5%. The top line also declined 14% from $2,127.9 million recorded in the year-ago quarter.
Highlights of the Release
Electricity consumption by small commercial and industrial customers increased 0.1% year over year. The same for large commercial and industrial customers, excluding the iron ore mine, decreased 3.2% on a year-over-year basis.
On a weather-normal basis, retail deliveries of electricity, excluding the iron ore mine, declined 0.6%.
Total electric retail sales volume for the quarter was 8,620.8 thousand megawatt-hour (MWh), down 1.8% year over year. The Zacks Consensus Estimate for the same was pegged at 8,931 thousand MWh.
Total electric sales volume for the quarter was 10,029.6 thousand MWh, down 2.4% year over year. Our model projected total electric sales volume of 10,847.7 thousand MWh for the quarter.
Total operating expenses were $1,404.7 million, down 18.3% from the year-ago quarter’s level of $1,719.7 million. This was due to lower cost of sales.
Operating income totaled $425.3 million, up 4.2% from the year-ago quarter’s recorded number of $408.2 million.
The company incurred an interest expense of $178.7 million, up 49.2% from the prior-year quarter’s level of $119.8 million. Our model projected interest expense of $170.8 million for the reported quarter.
Financial Position
As of Jun 30, 2023, WEC had cash and cash equivalents of $54.7 million compared with $28.9 million as of Dec 31, 2022.
As of Jun 30, 2023, the company had long-term debt of $15,608.3 million compared with $14,766.2 million as of Dec 31, 2022.
Net cash provided by operating activities during the first six months of 2023 was $1,754.3 million compared with $1,762.6 million in the year-ago period.
Guidance
WEC reaffirmed its 2023 earnings guidance in the range of $4.58-$4.62 per share. The midpoint of the range, $4.60 per share, is on par with the Zacks Consensus Estimate.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.32% due to these changes.
VGM Scores
Currently, WEC Energy has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WEC Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
