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Why Is Duke Energy (DUK) Down 2.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Duke Energy (DUK - Free Report) . Shares have lost about 2.9% in that time frame, underperforming the S&P 500.

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

Duke Energy's Q1 Earnings Beat, Revenues Rise Y/Y

Duke Energy Corporation reported first-quarter 2021 adjusted earnings of $1.26 per share, which surpassed the Zacks Consensus Estimate of $1.24 by 1.6%. The bottom line also improved 10.5% year over year, driven by growth in Electric Utilities and Infrastructure from rate case contributions. The adjusted earnings growth also benefited from prior-year unfavorable weather.

Including one-time adjustments, the company reported GAAP earnings of $1.25 per share compared with the year-ago quarter’s GAAP earnings of $1.24.

Total Revenues

Total operating revenues came in at $6,150 million, which improved 3.4% from $5,949 million a year ago. The reported figure however missed the Zacks Consensus Estimate of $6,208 million by 0.9%.

The Regulated electric unit’s revenues were $5,219 million (up 1.9% year over year), representing 84.9% of total revenues in the quarter.

Revenues from the regulated natural gas business totaled $749 million, down 10.6% year over year.

The Non-regulated Electric and Other segment generated revenues of $182 million, which dropped 2.7% year over year.

Operational Update

Duke Energy’s total operating expenses amounted to $4,700 million in the reported quarter, up 5.3% year over year. The escalation was on account of higher cost of natural gas; operation, maintenance and other expenses as well as increased depreciation and amortization.

Operating income dropped 2.6% to $1,450 million from $1,488 million in the year-ago quarter.

Interest expenses fell to $535 million from $551 million in first-quarter 2020.

Segmental Highlights

Electric Utilities & Infrastructure: This segment’s income in the first quarter totaled $820 million, higher than $705 million reported in the year-ago quarter.

Gas Utilities & Infrastructure: Reported income in this segment totaled $245 million, down from $249 million a year ago.

Commercial Renewables: This segment witnessed reported income of $27 million in the quarter under review compared with $57 million in the year-ago quarter.

Other: The segment includes corporate interest expenses not allocated to other business units, resulting from Duke Energy’s captive insurance company and other investments.

This segment incurred loss of $139 million compared with loss of $112 million in the year-ago quarter.

Financial Condition

As of Mar 31, 2021, Duke Energy had cash & cash equivalents of $379 million, up from $259 million as of Dec 31, 2020. Long-term debt was $54.78 billion at the end of first-quarter 2021 compared with $55.63 billion at 2020-end.

In the first quarter of 2021, the company generated net cash from operating activities of $2.09 billion compared with $1.55 billion generated in the prior-year quarter.

Guidance

Duke Energy has reaffirmed its 2021 adjusted EPS guidance. The company still expects adjusted earnings per share in the range of $5.00-$5.30. The Zacks Consensus Estimate for 2021 earnings is pegged at $5.17 per share, above the midpoint of the company’s projected range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Duke Energy has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 this revision indicates a downward shift. Notably, Duke Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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