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Xcel Energy (XEL) Down 3.5% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Xcel Energy Inc. XEL. Shares have lost about 3.5% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is XEL due for a breakout? Before we dive into how investors and analysts have reacted 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 Tops on Q1 Earnings, Reaffirms '18 View

Xcel Energy recorded first-quarter 2018 operating earnings of 57 cents per share, beating the Zacks Consensus Estimate of 51 cents by 11.8%. Also, the bottom line was 21.3% lower than the year-ago quarter.

The year-over-year increase in earnings was due to improvement in electric and natural gas margins, thanks to favorable weather compared to last year.

GAAP earnings in the quarter were 57 cents compared with 47 cents reported in the year-ago quarter.

Total Revenues

Xcel Energy’s first-quarter revenues of $2,951 million missed the Zacks Consensus Estimate of $2,956 million by 0.2%. Revenues were marginally higher than the prior-year quarter’s figure of $2,946 million.

Segment Results

Electric:
Revenues decreased to $2,270 million from $2,299 million in the last reported quarter.

Natural Gas: Quarterly revenues improved 5.8% to $662 million from a year ago.

Other: The segment recorded revenues of $19 million in the quarter, down 9.5% from the year-ago quarter.

Quarterly Highlights

Total operating expenses increased 0.7% year over year to $2,471 million. Costs increased primarily due to higher electric and fuel purchase power expenses.

Operating income in the reported quarter was down 2.4% from the prior-year quarter to $480 million.

Looking Ahead

Xcel Energy expects its 2018 operating earnings to be in the range of $2.37-$2.47 per share. The company expects to deliver long-term earnings growth within 5-6% from the 2017 base of $2.30 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. While looking back an additional 30 days, we can see even more upward momentum. There has been only one move up in the last two months.

VGM Scores

At this time, XEL has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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.

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

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, XEL has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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