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Duke Energy (DUK) Up 3.5% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Duke Energy Corporation (DUK - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Duke Energy Meets Q4 Earnings, Provides 2017 View

Duke Energy reported fourth-quarter 2016 adjusted earnings of $0.81 per share in line with the Zacks Consensus Estimate. Quarterly earnings however declined 6.9% year over year owing to higher planned operation and maintenance expenses as well as and higher interest expenses, partially offset by Piedmont's earnings contribution and net of financing costs.

For 2016, the company reported adjusted EPS of $4.69 in line with the Zacks Consensus Estimate. Year over year, this figure improved 3.3% from $4.54 in 2015.
 
Total Revenue

In the fourth quarter of 2016, the company’s total operating revenue was $5,624 million, up 15.9% from $4,851 million a year ago. Nevertheless, the reported figure missed the Zacks Consensus Estimate of $5,862 million by 4.1%.

For 2016, the company generated total revenue of $22.74 billion, which missed the Zacks Consensus Estimate of $23.82 billion by 4.5%. However, revenues improved 0.7% from $22.37 billion in 2015.

The regulated electric unit’s revenues were $21,221 million (down 0.7%), representing approximately 93.3% of the company’s quarterly total revenue. Revenues from the regulated natural gas business were $863 million (up 61%). Its non-regulated electric and other segment generated revenues were $659 million, up 44.5% year over year.

Operational Update

The company’s total operating expenses were $17,429 million in 2016, up from $17,323 million a year ago. Costs increased on account of higher cost of natural gas, operation, maintenance and other expenses, depreciation and amortization expenses and property as well as other taxes.

Operating income in 2016 increased to $5,341 million from $5,078 million a year ago.

Interest expenses rose to $1,916 million from $1,527 million a year ago.

Quarterly Segmental Highlights

Regulated Utilities: Adjusted income in the quarter was $483 million, down from $569 million a year ago. The downside can be attributed to higher operation and maintenance expenses, higher effective tax, higher interest expenses and amortization as well as depreciation expenses.

Gas Utilities & Infrastructure: Adjusted income of $89 million at this segment demonstrated an improvement from $14 million in the year-ago quarter.

Commercial Renewables: This segment reported adjusted income of $10 million in the quarter compared with $17 million a year ago. The decline was led by lower investment tax credits due to lower solar investments.

Other: The segment includes corporate interest expenses not allocated to other business units, results from Duke Energy’s captive insurance company, other investments, and income tax levelization adjustments.

Adjusted net expenses were $209 million, up from $170 million in the year-ago quarter.

Financial Condition

As of Dec 31, 2016, the company had cash & cash equivalents of $392 million, up from $383 million as of Dec 31, 2015. Long-term debt was $45.6 billion compared with $36.8 billion as of Dec 31, 2015.

In 2016, net cash from operating activities was $6,798 million compared with $6,676 million a year ago.

Guidance

The company expects to report its 2017 adjusted EPS in the range of $4.50−$4.70.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimate flatlined during the past month. There has been one upward revision for the current quarter compared to one downward.

VGM Scores

At this time, Duke Energy's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'C'. Following the exact same course, the stock was allocated also 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the stock is suitable for value and momentum investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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