Companhia Paranaense de Energia (ELP - Free Report) or COPEL reported disappointing results for fourth-quarter 2016. The company recorded a loss of R$0.29 per share or 9 cents per American Depository Receipt (ADR), as against earnings of R$1.45 per share or 38 cents per ADR in the year-ago quarter.
For 2016, the company’s earnings were R$3.50 per share or $1.00 per ADR. The ADR equivalent compared unfavorably with the Zacks Consensus Estimate of $2.50 per ADR.
Revenues
In the quarter, COPEL generated net operating revenue of R$3,426.4 million ($1,038.3 million), down 3.6% year over year.
The top-line weakness was triggered by decline of 30.7% in electricity sales to final customers, 7.4% in construction revenues, 39% in fair value of assets from the indemnity for the concession and 17.6% from distribution of piped gas. This softness was partially offset by 9.6% growth in electricity sales to distributors, 23.3% sales derived from use of the main distribution and transmission grid, 32% growth in telecommunications revenues and 120.8% increase in other operating revenues.
For 2016, the company’s net operating revenue declined 12.3% year over year to R$13,101.8 million ($3,754.1 million).
Electricity Sales
COPEL’s electricity sales to final customers include Copel Distribuicao’s sales in the captive market and Copel Geracao e Transmissao’s sales in the free market.
The company’s electricity sales to final customers decreased 10.1% year over year to 6,250 gigawatt hours in the quarter. The decline was led by a fall of 18.6% in Industrial, 12.9% in Commercial, 4.1% in Rural and 1.6% in Other segment, partially offset by a marginal increase of 0.3% in Residential.
Expenses/Income
In the quarter, COPEL recorded operating costs and expenses of R$3,396.1 million ($1,029.1 million), up 36.2% year over year. Expenses, as a percentage of revenues, were 99.1% versus 70.2% in the year-ago quarter. The company recorded 23.6% growth in costs related to electricity purchased for resale, 8.7% in personnel and management, 2.6% in pension and healthcare plans and 1.8% in depreciation and amortization.
However, the impact of higher costs and expenses was partially offset by 37.7% fall in charges for the main distribution and transmission grid, 2.8% costs related to materials and supplies, 22.4% in materials & supplies costs for power electricity, 49.9% decline in natural gas and supplies costs for the gas business, 8.4% in third-party services, 8.5% in construction costs and 45.1% in other costs and expenses.
Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) decreased 10% to R$658.1 million ($199.4 million), with an EBITDA margin of 19.2%.
Balance Sheet & Cash Flow
Exiting the fourth quarter, COPEL had cash and cash equivalents of R$982.1 million ($302. 2 million) versus R$1,417.7 million ($437.6 million) at the prior-quarter end. Loans, financing and debentures decreased 8.1% sequentially to R$6,235.2 million ($1,918.5 million).
In 2016, COPEL generated net cash of R$1,476.8 million ($423.2 million) from its operating activities, increasing 11.8% year over year. Capital spending on the purchase of property, plant and equipment increased 70.7% year over year to R$1,284.4 million ($368 million).
During the period, the company distributed approximately R$368.9 million ($105.7 million) as dividends and interest on equity.
Outlook
For 2017, COPEL plans to use R$2,034.9 million in capital expenditure. Of the total, roughly R$570.3 million will be used for the Generation and Transmission business, R$629.6 million for the Distribution business and R$164.3 million for the Telecommunications business. The rest is from improving other businesses.
Zacks Rank & Stocks to Consider
With market capitalization of $2.5 billion, COPEL currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the utility industry include Alliant Energy Corporation (LNT - Free Report) , Ameren Corporation (AEE - Free Report) and CenterPoint Energy, Inc. (CNP - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Alliant Energy’s earnings estimates for 2017 and 2018 have been revised upward over the last 60 days.
Ameren Corporation reported better-than-expected results in three out of last four quarters, with an average positive earnings surprise of 4. 20%.
CenterPoint Energy’s estimates grew for both 2017 and 2018. Also, it has a positive average earnings surprise of 0.40% for the last four quarters.
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Companhia Paranaense de Energia (ELP - Free Report) or COPEL reported disappointing results for fourth-quarter 2016. The company recorded a loss of R$0.29 per share or 9 cents per American Depository Receipt (ADR), as against earnings of R$1.45 per share or 38 cents per ADR in the year-ago quarter.
For 2016, the company’s earnings were R$3.50 per share or $1.00 per ADR. The ADR equivalent compared unfavorably with the Zacks Consensus Estimate of $2.50 per ADR.
Revenues
In the quarter, COPEL generated net operating revenue of R$3,426.4 million ($1,038.3 million), down 3.6% year over year.
The top-line weakness was triggered by decline of 30.7% in electricity sales to final customers, 7.4% in construction revenues, 39% in fair value of assets from the indemnity for the concession and 17.6% from distribution of piped gas. This softness was partially offset by 9.6% growth in electricity sales to distributors, 23.3% sales derived from use of the main distribution and transmission grid, 32% growth in telecommunications revenues and 120.8% increase in other operating revenues.
For 2016, the company’s net operating revenue declined 12.3% year over year to R$13,101.8 million ($3,754.1 million).
Electricity Sales
COPEL’s electricity sales to final customers include Copel Distribuicao’s sales in the captive market and Copel Geracao e Transmissao’s sales in the free market.
The company’s electricity sales to final customers decreased 10.1% year over year to 6,250 gigawatt hours in the quarter. The decline was led by a fall of 18.6% in Industrial, 12.9% in Commercial, 4.1% in Rural and 1.6% in Other segment, partially offset by a marginal increase of 0.3% in Residential.
Expenses/Income
In the quarter, COPEL recorded operating costs and expenses of R$3,396.1 million ($1,029.1 million), up 36.2% year over year. Expenses, as a percentage of revenues, were 99.1% versus 70.2% in the year-ago quarter. The company recorded 23.6% growth in costs related to electricity purchased for resale, 8.7% in personnel and management, 2.6% in pension and healthcare plans and 1.8% in depreciation and amortization.
However, the impact of higher costs and expenses was partially offset by 37.7% fall in charges for the main distribution and transmission grid, 2.8% costs related to materials and supplies, 22.4% in materials & supplies costs for power electricity, 49.9% decline in natural gas and supplies costs for the gas business, 8.4% in third-party services, 8.5% in construction costs and 45.1% in other costs and expenses.
Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) decreased 10% to R$658.1 million ($199.4 million), with an EBITDA margin of 19.2%.
Balance Sheet & Cash Flow
Exiting the fourth quarter, COPEL had cash and cash equivalents of R$982.1 million ($302. 2 million) versus R$1,417.7 million ($437.6 million) at the prior-quarter end. Loans, financing and debentures decreased 8.1% sequentially to R$6,235.2 million ($1,918.5 million).
In 2016, COPEL generated net cash of R$1,476.8 million ($423.2 million) from its operating activities, increasing 11.8% year over year. Capital spending on the purchase of property, plant and equipment increased 70.7% year over year to R$1,284.4 million ($368 million).
During the period, the company distributed approximately R$368.9 million ($105.7 million) as dividends and interest on equity.
Outlook
For 2017, COPEL plans to use R$2,034.9 million in capital expenditure. Of the total, roughly R$570.3 million will be used for the Generation and Transmission business, R$629.6 million for the Distribution business and R$164.3 million for the Telecommunications business. The rest is from improving other businesses.
Zacks Rank & Stocks to Consider
With market capitalization of $2.5 billion, COPEL currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the utility industry include Alliant Energy Corporation (LNT - Free Report) , Ameren Corporation (AEE - Free Report) and CenterPoint Energy, Inc. (CNP - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Alliant Energy’s earnings estimates for 2017 and 2018 have been revised upward over the last 60 days.
Ameren Corporation reported better-than-expected results in three out of last four quarters, with an average positive earnings surprise of 4. 20%.
CenterPoint Energy’s estimates grew for both 2017 and 2018. Also, it has a positive average earnings surprise of 0.40% for the last four quarters.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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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