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Wisconsin Energy Corp. reported third-quarter 2013 pro forma earnings of 60 cents per share, beating the Zacks Consensus Estimate by 4 cents. Earnings were however down 10.4% year over year due to lower demand given the mild weather.

Total Revenue

Wisconsin Energy reported total revenue of $1,053.2 million, surpassing the Zacks Consensus Estimate by 3.36%. The company’s revenue increased marginally from the year ago quarter.

Operational Update

Total operating expenses rose 4.8% year over year to $795.2 million due to an 11% and 9.6% escalation in cost of gas sold as well as operation and maintenance expenses, respectively.

The increase in revenue was more than offset by higher operating expenses. In the reported quarter, operating income fell 8% year over year to $258.0 million.

Financial Highlights

As of Sep 30, 2013, Wisconsin Energy's cash and cash equivalents were $18.5 million versus $35.6 million as of Dec 31, 2012.

Cash provided by operating activities during the first nine months of 2013 was $1,050.3 million versus $992.4 million in the first nine months of 2012.

Wisconsin Energy's capital expenditures in the first nine months of 2013 were $497.7 million, up from $477.5 million incurred in the first nine months of 2012.

Other Upcoming Releases

Calpine Corp. is scheduled to release its third quarter results on Nov 7, 2013. The Zacks Consensus Estimate is pegged at 59 cents.

ALLETE Inc. is slated to release its third quarter earnings on Nov 1, 2013. The Zacks Consensus Estimate is 73 cents.

Brookfield Infrastructure Partners L.P. is slated to release its third quarter earnings on Nov 6, 2013. The Zacks Consensus Estimate is 76 cents.

Our Take

Although Wisconsin Energy’s earnings and revenue beat our expectation in the third quarter, mild weather conditions were a year-over-year drag on earnings. However, we believe the company might benefit from the upcoming winter season assuming normal winter weather which will lead to increased power demand.

In addition, Wisconsin Energy’s strategic plan to shut down its 407 megawatt Michigan coal plant after losing its biggest customer, Cliff Natural Resources Inc., was ruled out by the Midcontinent Independent System Operator (MISO).

This came as a big blow to the company. If Wisconsin Energy fails to find another prospective buyer for the plant’s output, it could witness escalating cost pressure from the continued operation of the facility.

Wisconsin Energy currently has a Zacks Rank #4 (Sell).
 

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