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Eversource (ES) Down 0.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Eversource Energy (ES - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is 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 the most recent earnings report in order to get a better handle on the important catalysts.

Eversource Q4 Earnings Match Estimates, Revenues Beat

Eversource Energy reported fourth-quarter 2020 operating earnings of 85 cents per share, which matched the Zacks Consensus Estimate. Further, the bottom line improved 11.8% year over year. The improvement in earnings was due to strong execution and contribution from the acquired he Columbia Gas assets.

Total Revenues

Fourth-quarter revenues of $2,233.9 million beat the Zacks Consensus Estimate of $2,226 million by 0.4%. Total revenues also improved 8.9% from the year-ago figure of $2,050.4 million.

Highlights of the Release

Operating expenses increased 10.2% year over year to $1,779.2 million. Operating income was up 4.4% from the prior-year quarter to $454.7 million. Interest expenses increased 1.3% to $135.4 million.

Net income in the quarter under review was $291.2 million, up 16.5% from $250 million recorded in the year-ago period.

Segmental Performance

Electric Distribution: Earnings from this segment were $93.4 million, up 2.9% 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.

Electric Transmission: The segment’s earnings were up 2.2% year over year to $120.7 million. The upside was due to increased investment in Eversource’s transmission facilities.

Natural Gas Distribution: This segment’s earnings soared 57.3% to $62.3 million. The year-over-year improvement was due to higher revenues in NSTAR Gas and Yankee Gas and also contribution from acquired assets of Columbia Gas of Massachusetts.

Water Distribution: Earnings from this segment were $5.6 million, down from $8.5 million in the year-ago quarter.

Eversource Parent & Other Companies: The segment’s earnings were $9.2 million against loss of $6.9 million in the year-ago quarter.

Guidance

Eversource provided 2021 earnings guidance in the range of $3.81-$3.93 per share. The midpoint of management’s earnings guidance is $3.87, which is lower than the Zacks Consensus Estimate of $3.90 for the year.

Eversource expects long-term earnings growth through 2025 from its core regulated utility segments to be in the range of 5-7%.

The company expects its capital expenditure for 2021 to be $3.5 billion. Its total capital expenditure for 2021-2025 time period is expected to be $17 billion, which will assist Eversource to achieve its carbon neutral target by 2030.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Eversource has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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

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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