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Consolidated Edison Inc. (ED - Analyst Report) posted second quarter 2013 earnings from ongoing operations of 55 cents per share, missing the Zacks Consensus Estimate of 57 cents by 3.5%. The quarterly result also dropped 9.8% from the year-ago profit of 61 cents per share.

The weak numbers mainly reflect changes in the rate plans of the company’s utility subsidiaries. Again, the effects of weather on steam revenues and increases in certain operations and maintenance expenses, depreciation and property taxes adversely affected the performance.

On a reported basis, the company registered earnings of 59 cents per share compared with 73 cents in the year-ago quarter.

Operational Results

Although Consolidated Edison missed our expectation on the bottom line, the company’s top line increased 1.2% year over year to $2,818.0 million, ahead of our expectation of $2,778 million.

Of the total quarterly revenue, the company's largest top-line generator – Electric revenues –disappointed with a 3.4% drop. However, Gas revenues climbed 22.0% and Steam revenues jumped more than 42%, while Non-utility revenues increased 6% during the reported quarter.

Con Edison's utility subsidiaries, Consolidated Edison Company of New York, Inc. (CECONY) and Orange and Rockland Utilities, Inc. (O&R), as of Jun 30 2013, incurred response and restoration costs for Superstorm Sandy of $457.0 million and $93.0 million, respectively (including capital expenditures of $141.0 million and $15.0 million, respectively).


Consolidated Edison reaffirmed its earnings from ongoing operations forecast for 2013 in the range of $3.65 to $3.85 per share.

Zacks Rank

Consolidated Edison currently retains a Zacks Rank #3 (Hold). Stocks worth accumulating now are Huaneng Power International, Inc. (HNP - Snapshot Report), Integrys Energy Group, Inc. (TEG - Analyst Report) and NiSource Inc. (NI - Analyst Report). While Huaneng carries a Zacks Rank #1 (Strong Buy), the other two stocks carry a Zacks Rank #2 (Buy).

At the Peers

Another utility company Public Service Enterprise Group Inc. or PSEG reported second quarter 2013 earnings of 48 cents per share, beating the Zacks Consensus Estimate of 46 cents by 4.3%. The results were also up 11.6% year over year. The upside reflects locational advantage for the merchant generating fleet of assets and a sound operational performance.

Recently, diversified utility, NiSource Inc. posted net operating earnings of 23 cents per share in the second quarter of 2013, a penny or 4.2% lower than the Zacks Consensus Estimate. However, earnings were 4.5% higher than the year-ago quarter.

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