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Exelon (EXC) Down 1.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Exelon (EXC - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.

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

Exelon Q3 Earnings Surpass Estimates, 2020 View Up

Exelon Corporation’s third-quarter 2020 operating earnings of $1.04 per share surpassed the Zacks Consensus Estimate of 87 cents by 19.5%. The reported earnings were 13% higher than the year-ago figure owing to excellent operational performance and management of costs. The quarterly earnings also exceeded the guidance range of 80-90 cents per share.

On a GAAP basis, quarterly earnings were 51 cents per share compared with 79 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $8,853 million surpassed the Zacks Consensus Estimate of $8,620 million by 2.7%. However, the top line declined 0.9% from the year-ago figure of $8,929 million.

Highlights of the Release

Exelon's total operating expenses increased nearly 7% year over year to $8,087 million. The increase in total expenses was due to higher purchased power, fuel costs, and operation and maintenance expenses.

Interest expenses were $404 million, down 1.2% from $409 million in the year-ago quarter.

The company efficiently served 1.03% and 1.08% more electric and natural gas customers, respectively, than the first nine months of 2019. Exelon Generations’ nuclear fleet capacity factor was 96% for the quarter compared with 95.5% 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 Sep 30, 2020 was 97-100% for 2020 and 87-90% for 2021.

Financial Highlights

Cash and cash equivalents were $1,858 million as of Sep 30, 2020 compared with $587 million on Dec 31, 2019.

Long-term debt was $35,512 million as of Sep 30, 2020 compared with $$31,329 million on Dec 31, 2019.

Cash from operating activities for the first nine months of 2020 was $4,222 million compared with $5,399 million in the corresponding period of 2019.

Guidance

Exelon raised its 2020 earnings guidance to the range of $3.00-$3.20 from $2.80-$3.10 per share. The midpoint of the above guided range is $3.10, higher than the Zacks Consensus Estimate of $2.99 per share 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. Exelon now expects cost savings for the year to be higher than originally anticipated.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Exelon has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 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 these revisions indicates a downward shift. Notably, Exelon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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