We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The earnings season had a flying start with equity markets scaling record highs, owing to a slew of upbeat economic data, strong corporate performance and President Donald Trump's tax reform proposal. However, the performance has been a mixed bag for utilities, with some beating market expectations, while a few failing to do so.
We will now discuss the performance of three companies, Dominion Energy Inc, NextEra Energy Inc and Duke Energy Corp (read: Utility ETFs to Safeguard Your Portfolio).
Dominion Energy Inc
Shares of Dominion Energy Inc (D - Free Report) gained 0.7% at market close on Oct 30, 2017, owing to better-than-expected earnings. The company reported a year-over-year increase of 1.5% in net quarterly revenues.
Q3 Performance
Dominion reported non-GAAP earnings per share of $1.04, which surpassed the Zacks Consensus Estimate of $1.03 but came in lower than the year-ago figure of $1.14. However, revenues of $3.179 billion failed to beat the consensus mark of $3.327 billion. Income from operations increased to $1.2 billion from $1.145 billion in the year ago quarter.
Operating Earnings
Power Delivery reported operating earnings of $138 million, decreasing from $139 million a year ago.
Power Generation registered operating earnings of $369 million, decreasing from $650 million a year ago.
Gas Infrastructure reported operating earnings of $187 million, increasing from $135 million a year ago.
Corporate and other incurred operating loss of $22 million compared with a loss of $208 million a year ago.
Outlook
Dominion Energy expects full-year 2017 operating earnings to be in the range of $3.40-$3.90 per share and fourth quarter operating earnings in the band of $0.80-$1.00 per share.
NextEra Energy
Shares of NextEra Energy Inc. (NEE - Free Report) lost 0.3% at market close on Oct 26, 2017, owing to the revenue miss. The company reported a 0.06% year-over-year increase in net quarterly revenues. Moreover, it beat the Zacks Consensus Estimate on earnings but missed on revenues.
Q3 Performance
NextEra Energy reported non-GAAP earnings per share (EPS) of $1.85, increasing 6.3% year over year and beating the Zacks Consensus Estimate of $1.75. However, revenues of $4.808 billion missed the consensus mark of $4.893 billion.
The company reported operating income of $1.399 billion, reflecting an increase from $1.279 billion a year ago.
Revenue Performance
Florida Power and Light revenues increased to $3.477 billion from $3.283 billion a year ago.
NextEra Energy Resources revenues declined to $1.333 billion from $1.430 billion a year ago.
Guidance
NextEra Energy reiterated its adjusted EPS guidance range of $6.35-$6.85 for 2017 and $6.80-$7.30 for 2018.
Duke Energy Corp
Shares of Duke Energy Corp (DUK - Free Report) gained 0.30% at market close on Nov 3, 2017, after it surpassed the earnings estimates for the third quarter of 2017. The company reported a year-over-year decrease of 5% in net quarterly revenues.
Quarterly Performance
Duke Energy reported non-GAAP earnings per share of $1.59, which surpassed the Zacks Consensus Estimate of $1.56 but fell short of the year-ago earnings of $1.68. However, revenues of $6.482 billion failed to beat the consensus mark of $6.746 billion. Operating income declined to $1.695 billion from $1.954 billion a year ago.
Segment Performance
Electric Utilities and Infrastructure reported operating revenues of $6.129 billion, decreasing from $6.340 billion a year ago. Segment income amounted to $1.020 billion, down from $1.189 billion a year ago.
Gas Utilities and Infrastructure reported operating revenues of $272 million, increasing from $89 million a year ago. Moreover, segment income amounted to $19 million, up from $15 million a year ago.
Commercial Renewables reported operating revenues of $95 million, decreasing from $139 million a year ago. Segment loss amounted to $49 million, up from $24 million a year ago.
Other Revenues amounted to $35 million, increasing from $32 million a year ago. Segment expenses totaled $34 million, down from net expense of $181 million a year ago.
Outlook
Duke Energy narrowed its full-year 2017 adjusted earnings guidance to $4.50-$4.60 per share, from its prior guidance range of $4.50-$4.70 per share.
In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to the three companies.
XLU is one of the most popular funds in the utility space. It primarily provides exposure to the U.S. companies involved in electricity or natural gas. The fund has AUM of $7.7 billion and is a relatively cheaper bet as it charges a fee of 14 basis points a year. It has a 10.2% allocation to NextEra Energy, 8.2% to Duke Energy and 7.4% to Dominion Energy (as of Nov 3, 2017). The fund has returned 15.1% in a year and 13.7% year to date (as of Nov 3, 2017). It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
This ETF offers targeted exposure to U.S. utility companies. It has AUM of $2.7 billion and charges a fee of 10 basis points a year. It has an 8.5% allocation to NextEra Energy, 7.2% to Duke Energy and 6.0% to Dominion Energy (as of Sep 30, 2017). The fund has returned 16.2% in a year and 13.5% year to date (as of Nov 3, 2017). It has a Zacks ETF Rank #3 with a Medium risk outlook.
This ETF offers targeted exposure to U.S. utility companies. It has AUM of $746.9 million and charges a fee of 44 basis points a year. It has an 8.6% allocation to NextEra Energy, 7.6% to Duke Energy and 6.4% to Dominion Energy (as of Nov 2, 2017). The fund has returned 15.6% in the last one year and 13.5% year to date (as of Nov 3, 2017). It has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
ETFs in Focus After Utilities Q3 Results
The earnings season had a flying start with equity markets scaling record highs, owing to a slew of upbeat economic data, strong corporate performance and President Donald Trump's tax reform proposal. However, the performance has been a mixed bag for utilities, with some beating market expectations, while a few failing to do so.
We will now discuss the performance of three companies, Dominion Energy Inc, NextEra Energy Inc and Duke Energy Corp (read: Utility ETFs to Safeguard Your Portfolio).
Dominion Energy Inc
Shares of Dominion Energy Inc (D - Free Report) gained 0.7% at market close on Oct 30, 2017, owing to better-than-expected earnings. The company reported a year-over-year increase of 1.5% in net quarterly revenues.
Q3 Performance
Dominion reported non-GAAP earnings per share of $1.04, which surpassed the Zacks Consensus Estimate of $1.03 but came in lower than the year-ago figure of $1.14. However, revenues of $3.179 billion failed to beat the consensus mark of $3.327 billion. Income from operations increased to $1.2 billion from $1.145 billion in the year ago quarter.
Operating Earnings
Power Delivery reported operating earnings of $138 million, decreasing from $139 million a year ago.
Power Generation registered operating earnings of $369 million, decreasing from $650 million a year ago.
Gas Infrastructure reported operating earnings of $187 million, increasing from $135 million a year ago.
Corporate and other incurred operating loss of $22 million compared with a loss of $208 million a year ago.
Outlook
Dominion Energy expects full-year 2017 operating earnings to be in the range of $3.40-$3.90 per share and fourth quarter operating earnings in the band of $0.80-$1.00 per share.
NextEra Energy
Shares of NextEra Energy Inc. (NEE - Free Report) lost 0.3% at market close on Oct 26, 2017, owing to the revenue miss. The company reported a 0.06% year-over-year increase in net quarterly revenues. Moreover, it beat the Zacks Consensus Estimate on earnings but missed on revenues.
Q3 Performance
NextEra Energy reported non-GAAP earnings per share (EPS) of $1.85, increasing 6.3% year over year and beating the Zacks Consensus Estimate of $1.75. However, revenues of $4.808 billion missed the consensus mark of $4.893 billion.
The company reported operating income of $1.399 billion, reflecting an increase from $1.279 billion a year ago.
Revenue Performance
Florida Power and Light revenues increased to $3.477 billion from $3.283 billion a year ago.
NextEra Energy Resources revenues declined to $1.333 billion from $1.430 billion a year ago.
Guidance
NextEra Energy reiterated its adjusted EPS guidance range of $6.35-$6.85 for 2017 and $6.80-$7.30 for 2018.
Duke Energy Corp
Shares of Duke Energy Corp (DUK - Free Report) gained 0.30% at market close on Nov 3, 2017, after it surpassed the earnings estimates for the third quarter of 2017. The company reported a year-over-year decrease of 5% in net quarterly revenues.
Quarterly Performance
Duke Energy reported non-GAAP earnings per share of $1.59, which surpassed the Zacks Consensus Estimate of $1.56 but fell short of the year-ago earnings of $1.68. However, revenues of $6.482 billion failed to beat the consensus mark of $6.746 billion. Operating income declined to $1.695 billion from $1.954 billion a year ago.
Segment Performance
Electric Utilities and Infrastructure reported operating revenues of $6.129 billion, decreasing from $6.340 billion a year ago. Segment income amounted to $1.020 billion, down from $1.189 billion a year ago.
Gas Utilities and Infrastructure reported operating revenues of $272 million, increasing from $89 million a year ago. Moreover, segment income amounted to $19 million, up from $15 million a year ago.
Commercial Renewables reported operating revenues of $95 million, decreasing from $139 million a year ago. Segment loss amounted to $49 million, up from $24 million a year ago.
Other Revenues amounted to $35 million, increasing from $32 million a year ago. Segment expenses totaled $34 million, down from net expense of $181 million a year ago.
Outlook
Duke Energy narrowed its full-year 2017 adjusted earnings guidance to $4.50-$4.60 per share, from its prior guidance range of $4.50-$4.70 per share.
In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to the three companies.
Utilities Select Sector SPDR Fund (XLU - Free Report)
XLU is one of the most popular funds in the utility space. It primarily provides exposure to the U.S. companies involved in electricity or natural gas. The fund has AUM of $7.7 billion and is a relatively cheaper bet as it charges a fee of 14 basis points a year. It has a 10.2% allocation to NextEra Energy, 8.2% to Duke Energy and 7.4% to Dominion Energy (as of Nov 3, 2017). The fund has returned 15.1% in a year and 13.7% year to date (as of Nov 3, 2017). It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Vanguard Utilities ETF (VPU - Free Report)
This ETF offers targeted exposure to U.S. utility companies. It has AUM of $2.7 billion and charges a fee of 10 basis points a year. It has an 8.5% allocation to NextEra Energy, 7.2% to Duke Energy and 6.0% to Dominion Energy (as of Sep 30, 2017). The fund has returned 16.2% in a year and 13.5% year to date (as of Nov 3, 2017). It has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares U.S. Utilities ETF (IDU - Free Report)
This ETF offers targeted exposure to U.S. utility companies. It has AUM of $746.9 million and charges a fee of 44 basis points a year. It has an 8.6% allocation to NextEra Energy, 7.6% to Duke Energy and 6.4% to Dominion Energy (as of Nov 2, 2017). The fund has returned 15.6% in the last one year and 13.5% year to date (as of Nov 3, 2017). It has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>