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Why Is Duke Energy (DUK) Up 10.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Duke Energy (DUK - Free Report) . Shares have added about 10.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Duke Energy 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.
Duke Energy Q1 Earnings Miss, Revenues Decline Y/Y
Duke Energy reported first-quarter 2020 adjusted earnings of $1.14 per share, which missed the Zacks Consensus Estimate of $1.21 by 5.8%.
Including one-time adjustments, the company reported GAAP earnings of $1.24 per share, which came in line with the year-ago quarter’s figure.
The first-quarter results were impacted by mild winter weather along with severe storms amid improvements from electric base rate case increases, growth in new renewable projects and higher rider revenues.
Total Revenues
Total operating revenues came in at $5,949 million, which declined 3.5% from $6,163 million a year ago. The reported figure also missed the Zacks Consensus Estimate of $6,268 million by 5.1%.
The Regulated electric unit’s revenues were $5,124 million (down 3.1% year over year), representing 86% of total revenues in the quarter.
Revenues from the regulated natural gas business totaled $638 million, down 12.4% year over year.
The Non-regulated electric and Other segment generated revenues of $187 million, which improved 24.7% year over year.
Operational Update
Duke Energy’s total operating expenses amounted to $4,462 million in the reported quarter, down 6.8% year over year. The decline was on account of lower natural gas costs as well as reduced operation, maintenance and other expenses. Also, lower expenses related to fuel used in electric generation and purchased power contributed to reduced operating expenses.
Operating income increased 8.4% to $1,488 million from $1,373 million in the year-ago quarter.
Interest expenses rose to $551 million from $543 million in the year-ago quarter.
Segmental Highlights
Electric Utilities & Infrastructure: Adjusted income in the first quarter totaled $705 million, which was lower than $750 million in the year-ago quarter.
Gas Utilities & Infrastructure: Adjusted income at this segment totaled $249 million, up from $226 million a year ago.
Commercial Renewables: This segment recorded an adjusted income of $57 million in the quarter under review compared with $13 million in the year-ago quarter.
Other: The segment includes corporate interest expenses not allocated to other business units, results from Duke Energy’s captive insurance company and other investments.
This segment incurred an adjusted loss of $187 million compared with a loss of $89 million in the year-ago quarter.
Financial Condition
As of Mar 31, 2020, Duke Energy had cash & cash equivalents of $1,450 million, up from $311 million as of Dec 31, 2019. Long-term debt was $56.31 billion at the end of first-quarter 2020 compared with $54.99 billion at 2019-end.
During the first quarter, the company generated net cash from operating activities of $1,554million compared with $1,239million in the year-ago quarter.
Guidance
Duke Energy reiterated its 2020 adjusted EPS guidance. It continues to expect adjusted earnings per share in the range of $5.05-$5.45. The Zacks Consensus Estimate for 2020 earnings is pegged at $5.10 per share, below the mid-point of the company’s projected range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Duke Energy has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Duke Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Duke Energy (DUK) Up 10.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Duke Energy (DUK - Free Report) . Shares have added about 10.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Duke Energy 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.
Duke Energy Q1 Earnings Miss, Revenues Decline Y/Y
Duke Energy reported first-quarter 2020 adjusted earnings of $1.14 per share, which missed the Zacks Consensus Estimate of $1.21 by 5.8%.
Including one-time adjustments, the company reported GAAP earnings of $1.24 per share, which came in line with the year-ago quarter’s figure.
The first-quarter results were impacted by mild winter weather along with severe storms amid improvements from electric base rate case increases, growth in new renewable projects and higher rider revenues.
Total Revenues
Total operating revenues came in at $5,949 million, which declined 3.5% from $6,163 million a year ago. The reported figure also missed the Zacks Consensus Estimate of $6,268 million by 5.1%.
The Regulated electric unit’s revenues were $5,124 million (down 3.1% year over year), representing 86% of total revenues in the quarter.
Revenues from the regulated natural gas business totaled $638 million, down 12.4% year over year.
The Non-regulated electric and Other segment generated revenues of $187 million, which improved 24.7% year over year.
Operational Update
Duke Energy’s total operating expenses amounted to $4,462 million in the reported quarter, down 6.8% year over year. The decline was on account of lower natural gas costs as well as reduced operation, maintenance and other expenses. Also, lower expenses related to fuel used in electric generation and purchased power contributed to reduced operating expenses.
Operating income increased 8.4% to $1,488 million from $1,373 million in the year-ago quarter.
Interest expenses rose to $551 million from $543 million in the year-ago quarter.
Segmental Highlights
Electric Utilities & Infrastructure: Adjusted income in the first quarter totaled $705 million, which was lower than $750 million in the year-ago quarter.
Gas Utilities & Infrastructure: Adjusted income at this segment totaled $249 million, up from $226 million a year ago.
Commercial Renewables: This segment recorded an adjusted income of $57 million in the quarter under review compared with $13 million in the year-ago quarter.
Other: The segment includes corporate interest expenses not allocated to other business units, results from Duke Energy’s captive insurance company and other investments.
This segment incurred an adjusted loss of $187 million compared with a loss of $89 million in the year-ago quarter.
Financial Condition
As of Mar 31, 2020, Duke Energy had cash & cash equivalents of $1,450 million, up from $311 million as of Dec 31, 2019. Long-term debt was $56.31 billion at the end of first-quarter 2020 compared with $54.99 billion at 2019-end.
During the first quarter, the company generated net cash from operating activities of $1,554million compared with $1,239million in the year-ago quarter.
Guidance
Duke Energy reiterated its 2020 adjusted EPS guidance. It continues to expect adjusted earnings per share in the range of $5.05-$5.45. The Zacks Consensus Estimate for 2020 earnings is pegged at $5.10 per share, below the mid-point of the company’s projected range.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Duke Energy has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Duke Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.