Natural gas-focused energy company, Questar Corp. (STR - Free Report) , reported adjusted second-quarter earnings of 20 cents per share that missed the Zacks Consensus Estimate of 22 cents. The quarterly earnings also decreased from the year-ago quarter adjusted profit of 23 cents per share. Seasonality of the business led to poor results for the company.
Questar reported second-quarter revenues of $174.1 million, down 12.6% from a year ago. Moreover, the quarterly revenues came in below the Zacks Consensus Estimate of $248 million.
Segment Analysis
Questar Gas:The segment generated $128.2 million in revenues, down 9.5% from the prior-year quarter, owing to seasonality of its business. As of Jun 30, 2016, Questar Gas served more than 999,000 customers, up 2.1% year over year. This helped improve margins and in turn, result in the significant improvement in operating income to $3.8 million from the year-ago quarter profit of $1.4 million.
Wexpro:Segment revenues plunged 81.2% year over year to $1.9 million in the quarter. Segmental operating income from continuing operations also fell to $39.1 million from $41.8 million in the prior-year quarter owing to lower average investment base and reduced return on contracts on new developments.
Quarterly production of natural gas was up 2.1% to 14.6 billion cubic feet (Bcf) from 14.3 Bcf.
Questar Pipeline: The segment reported revenues of $42.9 million as against $46.5 million in the comparable quarter last year. Lower transportation revenues as well as a decline in demand for energy measurement services resulted in the underperformance. Moreover, income from continuing operations declined by $2.9 million from second-quarter 2015 to $26.4 million.
Total natural gas transportation volumes were $175 million decatherms compared with 197.3 million decatherms in the second quarter of 2015.
Expenses
General and administrative expenses for the quarter declined 5.1% from second quarter 2015 to $26 million, while depreciation, depletion and amortization costs rose 5.2% to $56.4 million. Total operating expense of $109.8 million decreased from the year-ago period level of $125.4 million owing to reduced corporate allocations and employee-related costs.
Financials
As of Jun 30, 2016, Questar had long-term debt (including current portion) of $999.2 million, with a debt-to-capitalization ratio of 42.3%.
Zacks Rank
Questar – which currently carries a Zacks Rank #3 (Hold) – entered into a $4.4 billion merger deal with Dominion Resources Inc. (D - Free Report) in Feb 2016 and expects to complete the deal by the end of the year. Investors may also consider better-ranked players from the same industry like Chesapeake Utilities Corporation (CPK - Free Report) and Just Energy Group Inc. . Both stocks hold a Zacks Rank #2 (Buy).
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Natural gas-focused energy company, Questar Corp. (STR - Free Report) , reported adjusted second-quarter earnings of 20 cents per share that missed the Zacks Consensus Estimate of 22 cents. The quarterly earnings also decreased from the year-ago quarter adjusted profit of 23 cents per share. Seasonality of the business led to poor results for the company.
Questar reported second-quarter revenues of $174.1 million, down 12.6% from a year ago. Moreover, the quarterly revenues came in below the Zacks Consensus Estimate of $248 million.
Segment Analysis
Questar Gas:The segment generated $128.2 million in revenues, down 9.5% from the prior-year quarter, owing to seasonality of its business. As of Jun 30, 2016, Questar Gas served more than 999,000 customers, up 2.1% year over year. This helped improve margins and in turn, result in the significant improvement in operating income to $3.8 million from the year-ago quarter profit of $1.4 million.
Wexpro:Segment revenues plunged 81.2% year over year to $1.9 million in the quarter. Segmental operating income from continuing operations also fell to $39.1 million from $41.8 million in the prior-year quarter owing to lower average investment base and reduced return on contracts on new developments.
Quarterly production of natural gas was up 2.1% to 14.6 billion cubic feet (Bcf) from 14.3 Bcf.
Questar Pipeline: The segment reported revenues of $42.9 million as against $46.5 million in the comparable quarter last year. Lower transportation revenues as well as a decline in demand for energy measurement services resulted in the underperformance. Moreover, income from continuing operations declined by $2.9 million from second-quarter 2015 to $26.4 million.
Total natural gas transportation volumes were $175 million decatherms compared with 197.3 million decatherms in the second quarter of 2015.
Expenses
General and administrative expenses for the quarter declined 5.1% from second quarter 2015 to $26 million, while depreciation, depletion and amortization costs rose 5.2% to $56.4 million. Total operating expense of $109.8 million decreased from the year-ago period level of $125.4 million owing to reduced corporate allocations and employee-related costs.
Financials
As of Jun 30, 2016, Questar had long-term debt (including current portion) of $999.2 million, with a debt-to-capitalization ratio of 42.3%.
Zacks Rank
Questar – which currently carries a Zacks Rank #3 (Hold) – entered into a $4.4 billion merger deal with Dominion Resources Inc. (D - Free Report) in Feb 2016 and expects to complete the deal by the end of the year. Investors may also consider better-ranked players from the same industry like Chesapeake Utilities Corporation (CPK - Free Report) and Just Energy Group Inc. . Both stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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