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Wisconsin Energy Beats Earnings Estimates on Higher Revs

Zacks Equity Research

Wisconsin Energy Corporation (WEC) reported second-quarter 2014 adjusted earnings per share of 59 cents, exceeding both the Zacks Consensus Estimate as well as the prior-year figure of 52 cents by 13.5%.

On a GAAP basis, the company’s earnings per share were 58 cents versus 52 cents a year ago. The difference between GAAP and adjusted earnings was due to a penny charge related to the impending acquisition of Integrys Energy Group, Inc. (TEG).

Total Revenue

In the second quarter, Wisconsin Energy’s total revenue of $1,043.7 million missed the Zacks Consensus Estimate of $1,045 million by 0.1%. On a year-over-year basis, reported revenue increased 3.1% primarily on the back of higher electricity as well as natural gas customers and increased electricity consumption by large commercial and industrial customers.

Operational Update

In the quarter under review, Wisconsin Energy’s total operating expenses edged up 3% year over year to $806.1 million, mainly due to higher fuel and purchased power expenses, and increases in cost of goods sold as well as depreciation and amortization expenses.

Operating income in the reported quarter was $240.7 million, up 4.9% from $229.5 million a year ago.

Wisconsin Energy’s second-quarter interest expenses decreased 6.8% year over year to $59 million.

Financial Condition

As of Jun 30, 2014, Wisconsin Energy had cash and cash equivalents of $33.4 million versus $26 million as of Dec 31, 2013.

The company’s long-term debt increased to $4,587.5 million as of Jun 30, 2014 from $4,363.2 million as of Dec 31, 2013.

During the first half of 2014, cash from operating activities was $721.3 million, up from $681.5 million in the year-ago period.

Wisconsin Energy invested $305.5 million during the first six months of 2014 in capital expenditure, compared with $307.3 million in the prior-year period.

Other Company Releases

American Electric Power Company Inc. (AEP) reported second-quarter 2014 operating earnings of 80 cents per share, beating the Zacks Consensus Estimate of 75 cents by 6.7%.

CMS Energy Corp. (CMS) reported second-quarter 2014 earnings per share of 30 cents, surpassing the Zacks Consensus Estimate of 26 cents by 15.4%.

Our Take

Wisconsin Energy maintained its earnings streak primarily on the back of higher revenues and a lower share count.

Going forward, Wisconsin Energy’s infrastructure development projects will enable it to provide reliable services to customers.

Wisconsin Energy’s proposed acquisition of Integrys Energy Group will help it to increase its scale of operations and serve more customers. Subject to customary approvals, the transaction is expected to close in the summer of 2015.

We also appreciate the company’s effective share repurchase program, which will boost shareholder value.

Wisconsin Energy currently has a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on WEC
Read the Full Research Report on AEP
Read the Full Research Report on CMS
Read the Full Research Report on TEG

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