Allegheny Tops Zacks View

Allegheny Energy (AYE) has beaten the Zacks Consensus EPS estimate of 51 cents by reporting EPS of 66 cents in the fourth quarter of fiscal 2009. The upbeat trend was reflected in fiscal 2009 results as well, where EPS of $2.33 shot past Zacks Consensus EPS estimate of $2.17 and fiscal 2008's $2.30 per share.

Out of the 12 analysts covering the stock, two have revised downwards their estimates in the last 30 days for fiscal 2010. Allegheny Energy’s upsurge in earnings has yet to be reflected in the Zacks Consensus EPS Estimate of $2.24 for fiscal 2010.

Allegheny Energy’s operating revenues of $861.1 million in the reported quarter increased by $153.3 million year-over-year. This was due to higher generation rates in Pennsylvania, power hedges, increased capacity revenue and sales to third parties, higher cost recovery in Virginia and increased revenue from transmission expansion. These benefits were partially offset by reduced generation output and lower power prices.

Allegheny Energy’s retail volume sales fell 5.9% year-over-year. This was mainly due to 11.1% lower volume sales to industrial customers. Regulated generation fell 56% year-over-year, while merchant generation decreased 21.5%.

In the Merchant Generation segment, Allegheny Energy’s adjusted net income in the reported quarter increased by $9.9 million to $77.7 million. This was due to lower fuel costs, power hedges, capacity revenue, the purchase of hydro generation facilities and the Pennsylvania tax law change. These factors were partially offset by decreased generation volume, low power prices, the elimination of an inter-company transfer payment and higher depreciation and interest expense.

In the Regulated Operations segment, Allegheny Energy’s adjusted net income in the reported quarter increased by $15.7 million to $34.8 million. The upsurge came from increased cost recovery in Virginia, the elimination of an inter-company transfer payment and higher income from transmission expansion. This was partially offset by lower revenues from retail sales and higher income taxes due to an increase in pre-tax income.

Allegheny Energy reported cash and cash equivalents at the end of fiscal 2009 of $286.6 million, while long-term debt stood at $4.4 billion.

Read the full analyst report on AYE