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Why Is Eversource (ES) Down 3.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Eversource Energy (ES - Free Report) . Shares have lost about 3.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Eversource due for a breakout? 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.

Eversource Q3 Earnings Lag, Revenues Beat Estimates

Eversource Energy reported third-quarter 2020 operating earnings of $1.01 per share, which missed the Zacks Consensus Estimate by a penny. However, the reported earnings improved 3.1% year over year. The year-over-year improvement in earnings was due to strong execution of its operations amid the pandemic.

Total Revenues

Third-quarter revenues of $2,343.6 million beat the Zacks Consensus Estimate of $2,265 million by 3.47%. Total revenues also improved 7.7% from the year-ago figure of $2,175.8 million.

Highlights of the Release

Operating expenses increased 6.9% year over year to $1,782.4 million. Operating income was up 10.2% from the prior-year quarter to $561.2 million. Interest expenses dropped 0.8% year over year to $134.3 million.

Net income for the quarter under review was $346.3 million, up 8.6% from $318.9 million recorded in the year-ago period.

Segmental Performance

Electric Distribution: Earnings from this segment were $205 million, up 4.2% from the prior-year quarter. The upside was primarily attributed to higher revenues, partially offset by increased operation and maintenance costs due to high storm restoration cost, as well as interest expenses.

Electric Transmission: Earnings of the segment were up 16.8% year over year to $125.6 million. The upside was due to increased investment in Eversource’s transmission facilities.

Natural Gas Distribution: This segment’s loss was $14 million, narrower than a loss of $17.1 million in the year-ago quarter. The year-over-year improvement was due to higher revenues, partially offset by increased operation and maintenance expenses, as well as high depreciation costs.

Water Distribution: Earnings from this segment were $23.1 million, up 32% from $17.5 million in the year-ago quarter. The improved results were due to gains from the Hingham, Massachusetts water distribution system sale and lower interest rates.

Eversource Parent & Other Companies: The segment’s earnings were $11.4 million compared with $13.7 million in the year-ago quarter.

Guidance

Eversource reaffirmed its 2020 earnings guidance in the range of $3.60-$3.70 per share. The midpoint of management’s 2020 EPS guidance is $3.65, which is higher than the current Zacks Consensus Estimate of $3.63 for the period.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, Eversource has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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