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Analyst Blog

Westar Energy, Inc. (WR - Snapshot Report) reported third-quarter 2013 earnings per share of $1.04, beating the Zacks Consensus Estimate by 4 cents. Quarterly earnings however declined 5.5% from the year-ago level primarily due to a cooler summer affecting demand, increased operating and maintenance (O&M) expenses and lower demand from industrial customers.

Operational Update

Westar Energy posted total revenues of $695 million, brushing past the Zacks Consensus Estimate of $694 million. Revenue decreased marginally by 0.1% from the year-ago figure of $695.8 million.

Strong sales from the Wholesale and Transmission segments offset by a decline in retail revenues as well as from the Other category led to the marginal decline in the third quarter top-line.

The company’s total operating cost increased 5.6% year over year to $470.8 million mainly due to higher O&M expenses as well as depreciation and amortization costs.

The rise in operating cost dragged down Westar Energy’s operating income by 10.3% year over year to $224.2 million.

Interest expenses increased 1.5% year over year to $45.7 million due to the escalating long-term debt level.

Financial Condition

Cash and cash equivalents of Westar Energy as of Sep 30, 2013, were $9.9 million, up from $5.8 million as of Dec 31, 2012.

The company’s long-term debt increased to $2,968.8 million as of Sep 30, 2013 from $2,819.3 million as of Dec 31, 2012 due to the issuance of new bonds worth $500 million.

Westar Energy’s cash flow from operating activities during the first nine months of 2013 was $553.1 million, up 21.9% from $454.0 million in the first nine months of 2012. Cash flow increased on account of receipts from retail and wholesale customers, accrual of corporate-owned life insurance proceeds, gains from treasury yield transaction, lower pension, lower post-retirement benefit as well as fuel and purchased power costs.

Guidance

Westar Energy increased its full-year 2013 earnings guidance to the range of $2.20 to $2.30 per share from the prior $2.05 to $2.15 per share.

Other Company Releases

ALLETE Inc. (ALE - Snapshot Report) reported third-quarter 2013 earnings of 63 cents per share, missing the Zacks Consensus Estimate of 73 cents by 13.7%.

FirstEnergy Corporation (FE - Analyst Report) announced third-quarter 2013 operating earnings of 94 cents per share, beating the Zacks Consensus Estimate of 91 cents.

PPL Corporation (PPL - Analyst Report) reported third-quarter 2013 pro forma earnings per share of 66 cents, missing the Zacks Consensus Estimate by 3 cents.

Zacks Rank

Westar Energy currently carries a Zacks Rank #4 (Sell).

Topeka, Ks.-based Westar Energy provides electricity to retail as well as wholesale customers. The company utilizes coal, natural gas, uranium, wind and landfill gas for electricity generation.

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