NV Energy Meets EPS, Sales Trail

NV Energy Inc.’s ( NVE - Snapshot Report ) fourth-quarter 2012 earnings per share were 7 cents, in line with the Zacks Consensus Estimate and beating the year-ago loss of 11 cents per share.

2012 earnings were $1.35 per share, up 95.6% from the year-ago earnings of 69 cents per share. 2012 earnings were also in line with the Zacks Estimate Consensus Estimate.

The favorable earnings resulted from positive rate changes and lower interest expense partially offset by soft weather conditions.

Revenue

Total operating revenue for the quarter was $600.6 million, down 1.5% from $609.6 million in the prior-year quarter. Quarterly revenue fell below the Zacks Consensus Estimate by 6.6%.

For 2012, the company clocked revenue of $2,979.2 million compared with $2,943.3 million in 2011. The top line for 2012 also lagged the Zacks Consensus Estimate by 5.8%.

Operational Highlights

Total operating expenses for the quarter declined 5.4% to $504.0 million from $532.9 million in the year-ago period. This was due to a sharp 25.5% drop in gas purchases and a 2.06% decline in energy efficiency program costs.

For 2012, total operating cost and expenses declined 5.9% to $2,194.1 million from $2,332.6 million in the year-ago quarter. This stemmed from a 40.5% and 16.9% fall in gas purchase and fuel costs, respectively.

Total operating income for the fourth quarter stood at $96.5 million, up 25.8% from $76.7 million in the year-ago quarter. The greater decline in operating cost relative to the revenue fall led to the jump in profits.

Interest expense was $73.3 million in the fourth quarter versus $89.9 million in the corresponding year-ago period.

Dividend Update

The board of directors approved a 12% hike in the quarterly dividend to 19 cents per share payable on Mar 20, 2013 to shareholders of record on Mar 5, 2013.

Guidance

NV Energy expects earnings in 2013 in the range $1.25 to $1.35 per share. The company anticipates dividend growth of 10% when it reaches a payout ratio of 60%–65%.

Other Utility Company Releases

Calpine Corporation ( CPN - Snapshot Report ) posted operating earnings of 22 cents per share for the fourth quarter of 2012 as against the Zacks Consensus Estimate as well as the year-ago figure of a loss of 3 cents. DTE Energy Company ( DTE - Analyst Report ) reported fourth-quarter operating earnings of 85 cents per share, in line with the Zacks Consensus Estimate. ALLETE Inc. ( ALE - Snapshot Report ) reported fourth-quarter earnings of 75 cents per share compared with 53 cents per share in the year-ago quarter. ALLETE’s earnings were in line with the Zacks Consensus Estimate.

Our View

NV Energy ended the year with mixed results as the top line missed our expectation while the bottom line equaled it. We believe expansion in the consumer footprint, expectation of a rise in natural gas prices and cost control efforts would shore up returns in the upcoming quarters. Moreover, the company’s renewable asset basket is expected to contribute to profitability, going forward.

However, weather variations and unplanned outages are risks the company needs to watch out for. Currently, NV Energy carries a Zacks Rank #3 (Hold).

Based in Las Vegas, Nev. NV Energy and its subsidiaries engage in the generation, transmission, distribution and sale of electric energy in Nev.