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Exelon (EXC) Up 0.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Exelon (EXC - Free Report) . Shares have added about 0.8% in that time frame, underperforming the S&P 500.

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

Exelon Q2 Earnings Surpass Estimates, Revenues Miss

Exelon Corporation’s second-quarter 2020 operating earnings of 55 cents per share surpassed the Zacks Consensus Estimate of 42 cents by 30.9%. The reported earnings were 8.3% lower than the year-ago figure owing to the COVID-19 pandemic and lower utility earnings, primarily attributed to higher storm costs at PECO.

On a GAAP basis, quarterly earnings were 53 cents per share compared with 50 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $7,322 million lagged the Zacks Consensus Estimate of $7,437 million by 1.5%. The top line also declined 4.8% from the year-ago figure of $7,689 million.

Highlights of the Release

Exelon's total operating expenses decreased 1.6% year over year to $6,769 million. The decline in total expenses was due to lower purchased power and fuel costs.

Interest expenses were $427 million, up 4.4% from $409 million in the year-ago quarter.

The company efficiently served 0.9% and 1.2% more electric and natural gas customers, respectively, than first-half 2019 levels. Exelon Generations’ nuclear fleet capacity factor was 95.4% for the quarter compared with 95.1% in the year-ago period.

Hedges

Exelon's hedging program involves safeguarding of commodity risks for expected generation, typically on a ratable basis, over a three-year period. The proportion of expected generation hedged as of Jun 30, 2020 was 98-101% for 2020 and 76-79% for 2021.

Financial Highlights

Cash and cash equivalents were $2,129 million as of Jun 30, 2020 compared with $587 million on Dec 31, 2019.

Long-term debt was $36,112 million as of Jun 30, 2020 compared with $$31,329 million on Dec 31, 2019.

Cash from operating activities for first-half 2020 was $2,680 million compared with $2,898 million in the first half of 2019.

Guidance

Exelon reaffirmed its 2020 earnings guidance in the range of $2.80-$3.10 per share. The midpoint of the above guided range is $2.95, in line with the Zacks Consensus Estimate for the period. The company identified $250 million in cost savings across its operating companies to partly offset the expected unfavorable impacts on operating revenues in the latter part of the year.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Exelon has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 these revisions indicates a downward shift. It's no surprise Exelon has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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