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Energy holding company, SCANA Corp. (SCG - Analyst Report) reported strong second-quarter 2014 results of 68 cents per share, surpassing both the Zacks Consensus Estimate of 63 cents and the year-ago figure of 60 cents. The upside came from weather-related electricity sales, along with customer growth and rate base hikes.
 

The company’s quarterly operating revenue increased 1% year over year to $1,026.0 million and also came above the Zacks Consensus Estimate of $1,006.0 million.  

Segment Performance

South Carolina Electric & Gas Company (SCE&G): Quarterly earnings from this segment, SCANA's principal subsidiary, were 70 cents per share, up from the year-ago level of 63 cents. This was due to higher electricity cum gas margins, a Base Load Review Act rate increase, customer growth and higher gas margins. The improvement was partially offset by increases in operations and maintenance expenses, higher property taxes, depreciation and share dilution.

As of Jun 30, 2014, natural gas and electric customers of SCE&G increased 2.3% and 1.4% from a year ago to 332,000 and 684,000, respectively.

PSNC Energy: This segment recorded earnings of a penny per share versus a breakeven in the year-ago quarter. As of Jun 30, PSNC Energy’s customer base grew 2.3% year over year to 505,000.

SCANA Energy-Georgia: The segment – comprising SCANA’s retail natural gas marketing business in Georgia – posted loss of 2 cents per share, flat year over year.

Corporate and Other, Net: This business segment posted earnings of a penny per share, flat year over year.

Guidance

SCANA affirmed its 2014 earnings guidance of $3.45–$3.65 per share.

Outlook

We expect SCANA to benefit from the new electric generation plants within its service territory and nuclear expansion projects, going forward. The company is a stable, relatively strong and regulated integrated electric utility, supported by favorable regional demographics and electric utility rate. On the flip side, we are apprehensive of the company’s sensitivity to changes in coal, gas, oil and other commodity prices. Construction costs and delays could affect the timing of rate base growth, earnings, cash flow and balance sheet quality.

SCANA currently carries a short-term Zacks Rank #3 (Hold). Meanwhile, one can consider other energy sector stocks such as Newfield Exploration Co. (NFX - Analyst Report), Weatherford International plc (WFT - Analyst Report) and Cameron International Corp. (CAM - Analyst Report). All these stocks currently sport a Zacks Rank #1 (Strong Buy).
 

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