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Why Is Xcel (XEL) Up 5.4% Since Last Earnings Report?

Zacks Equity Research
Provident Financial (PFS) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

A month has gone by since the last earnings report for Xcel Energy (XEL). Shares have added about 5.4% in that time frame, outperforming the S&P 500.

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

Xcel Energy's Earnings Meet Estimates in Q1, Up Y/Y

Xcel Energy posted first-quarter 2019 operating earnings of 61 cents per share, in line with the Zacks Consensus Estimate. Also, the bottom line improved 7% year over year.

The upside can be attributed to higher electric and natural gas margin, courtesy of regulatory rate outcomes and favorable weather. However, these factors were partially offset by higher depreciation, operating and maintenance as well as interest expenses.

Total Revenues

Xcel Energy’s first-quarter revenues of $3,141 million beat the Zacks Consensus Estimate of $3,071 million by 2.3%. The figure rose 6.4% from the prior-year quarter’s tally of $2,951 million. Strong segmental performances drove the company’s total revenues.

Segment Results

Electric: Revenues improved 2.4% to $2,325 million from $2,270 million in the last reported quarter.

Natural Gas:  Revenues improved 20% to $794 million from the year-ago quarter’s tally.

Other: Revenues in the segment amounted to $22 million in the quarter, up 15.8% from the year-ago quarter’s figure.

Quarterly Highlights

Total operating expenses increased 7.4% year over year to $2,655 million.

Operating income in the reported quarter inched up 1.2% from the prior-year quarter’s tally to $486 million.

Total interest charges and financing costs in the reported quarter rose 11.8% from the prior-year quarter’s figure to $179 million.

Outlook

Xcel Energy reaffirmed 2019 earnings per share guidance in the range of $2.55-$2.65 and long-term earnings growth in the band of 5-7% from a base of $2.43 (mid-point of the original 2018 guidance range) per share.

Xcel Energy projects an annual increase in dividend rate by 5-7%.
 

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Xcel has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. 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 C. 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 these revisions looks promising. Notably, Xcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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