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Why Is OGE Energy (OGE) Up 3.8% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for OGE Energy Corporation (OGE - Free Report) . Shares have added about 3.8% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is OGE 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 drivers.

OGE Energy's Q1 Earnings Beat Estimates, Sales Up Y/Y

OGE Energy reported first-quarter 2018 adjusted earnings of 27 cents per share, beating the Zacks Consensus Estimate of 17 cents by 58.8%. Earnings also improved 50% from 18 cents in the year-ago quarter.

Revenues

OGE Energy’s operating revenues of $492.7 million were up 8% from the prior-year quarter’s figure of $456 million. The top line improved on the back of 5.1% increase in residential revenues. 

Operational Highlights

Total sales in the reported quarter amounted to 6.8 million megawatt-hours (MWh), up from 6.2 million MWh in the prior-year quarter. The upside can be attributed to higher system sales, which increased 10.2% year over year. Meanwhile, the company’s customer count inched up by 0.9% to 843,322.

Cost of sales in the quarter under review was $210.5 million, compared with $208.7 in the prior-year quarter.

Total operating expenses rose 10% year over year to $221.7 million on account of higher depreciation and amortization expenses as well as higher taxes (other than income). Operating income increased 32.4% to $60.5 million from the year-ago quarter’s figure of $45.7 million.

Interest expenses totaled $38.6 million in the quarter, up from $35 million in the year-ago quarter.

Other Highlights of the Release

OGE Energy reported net income of $55 million as of Mar 31, 2018, up from the prior-year quarter’s figure of $36 million.

OG&E: The segment’s net income surged 94% year over year to $31 million in the first quarter. The upside was driven by lower operation and maintenance expense, a favorable weather as well as new rates implemented in May 2017.

Natural Gas Midstream Operations: The segment posted net income of $24 million in the reported quarter compared with $20 million in the year-ago quarter. The upside was mainly led by lower income tax expense.

Guidance

OGE Energy reaffirmed its consolidated earnings guidance for 2018 in the range of $1.90-$2.05 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

OGE Energy Corporation Price and Consensus

 

VGM Scores

At this time, OGE has an average Growth Score of C, a grade with the same score on the momentum front. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the company's stock is suitable for growth and momentum investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, OGE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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