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

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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 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 the most recent earnings report in order to get a better handle on the important drivers.

Eversource's Q1 Earnings and Revenues Top Estimates

Eversource Energy reported first-quarter 2020 operating earnings of $1.15 per share, which surpassed the Zacks Consensus Estimate by 4.6%.

The bottom line also improved 12.8% year over year. The improvement in earnings was due to strong execution and contribution from the acquired Columbia Gas assets.

Revenues

First-quarter revenues of $2,825.8 million beat the Zacks Consensus Estimate of $2,641 million by 7%. Total revenues also improved 19% from the year-ago figure of $2,373.7 million.

Highlights of the Release

Operating expenses increased 22.1% year over year to $2,240.3 million. Operating income was up 8.6% from the prior-year quarter to $585.6 million. Interest expenses increased 2.3% to $137.8 million.

Net income for the quarter under review was $368 million, up 9.3% from $336.6 million recorded in the year-ago period.

Segmental Performance

Electric Distribution: Earnings from this segment were $93.2 million, down 28.4% from the prior-year quarter. The decline was due to higher storm-related cost, and increased depreciation as well as property tax expenses.

Electric Transmission: The segment’s earnings were up 6.8% year over year to $135.4 million. The upside was due to increased investment in Eversource’s transmission facilities.

Natural Gas Distribution: This segment’s earnings soared 71.8% from the prior-year quarter to $147.6 million. The year-over-year improvement was due to higher revenues in NSTAR Gas and Yankee Gas as well as contribution from the acquired assets of Columbia Gas in Massachusetts.

Water Distribution: Earnings from this segment were $3.6 million, up from $2.1 million in the year-ago quarter.

Eversource Parent & Other Companies: The segment’s loss was $13.7 million compared with a loss of $10.1 million in the year-ago quarter.

Guidance

Eversource expects earnings for 2021 to be at the lower end of the guided range of $3.81-$3.93 per share. The midpoint of management’s earnings guidance is $3.87, which is higher than the Zacks Consensus Estimate of $3.86 for the year.

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

 

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months.

VGM Scores

At this time, Eversource has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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

Eversource has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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