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Duke Energy (DUK) Misses on Q2 Earnings, Revenues Up Y/Y

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Duke Energy Corporation (DUK - Free Report) reported second-quarter 2018 adjusted earnings of 93 cents per share, missing the Zacks Consensus Estimate of $1.03 by 9.7%. Quarterly earnings also declined 7.9% year over year, primarily due to a lower tax shield on holding company interest as a result of the Tax Cuts and Jobs Act of 2017 (Tax Act), higher depreciation from a growing asset base, and higher operation and maintenance expenses (O&M) including storm costs.

Barring one-time adjustments, the company reported GAAP earnings of 71 cents in the reported quarter compared to 98 cents in the prior-year quarter.

Total Revenue

In the reported quarter, the company’s total operating revenues were $5,643 million, up 1.6% from $5,555 million a year ago. The reported figure also surpassed the Zacks Consensus Estimate of $5,590 million by 1%.

The regulated electric unit’s revenues were $5,178 million (up 1.2%), representing approximately 91.8% of the company’s quarterly total revenues. Revenues from the regulated natural gas business were $291 million (up 5.8%). Moreover, its non-regulated and other segment generated revenues of $174 million, up 7.4% year over year.

Operational Update

The company’s total operating expenses were $4,667 million in the quarter, up from $4,209 million a year ago. Costs flared up due to excessive fuel used in electricity generation and purchased power, cost of natural gas, operation, maintenance and other expenses, depreciation and amortization expenses, property impairment charges, as well as other taxes.

Consequently, operating income in the quarter decreased to $979 million from $1,353 million a year ago.

Interest expenses rose to $518 million from $486 million a year ago.

Duke Energy Corporation Price, Consensus and EPS Surprise

Duke Energy Corporation Price, Consensus and EPS Surprise | Duke Energy Corporation Quote

Quarterly Segmental Highlights

Electric Utilities & Infrastructure: Adjusted income in the quarter was $711 million, down from $729 million a year ago. The downside can be attributed to higher depreciation and amortization expenses, higher O&M expenses, and lower AFUDC equity.

Gas Utilities & Infrastructure: Adjusted income of $28 million at this segment demonstrated an improvement from $27 million in the year-ago quarter.

Commercial Renewables: This segment reported adjusted income of $38 million in the quarter compared with $26 million a year ago. Higher quarterly earnings at this segment were primarily driven by a favorable
settlement on a contractual agreement.

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

Adjusted net expenses were $121 million, up from $75 million in the year-ago quarter.

Financial Condition

As of Jun 30, 2018, the company had cash & cash equivalents of $304 million, down from $358 million as of Dec 31, 2017. Long-term debt (including VIEs) was $49.86 billion at the end of the second quarter compared with $49 billion as of Dec 31, 2017.

In the first six months of the year, net cash from operating activities was $3,302 million compared with $2,800 million in the year-ago period.

Guidance

The company still expects to report its 2018 adjusted EPS in the range of $4.55−$4.85.

Zacks Rank

Duke Energy presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

Xcel Energy (XEL - Free Report) recorded second-quarter 2018 operating earnings of 52 cents per share, beating the Zacks Consensus Estimate of 47 cents by 10.6%. Also, the bottom line was 15.6% higher than the year-ago quarter’s tally.

DTE Energy (DTE - Free Report) reported second-quarter 2018 operating earnings per share of $1.36, which outpaced the Zacks Consensus Estimate of $1.11 by 22.5%.

American Electric Power (AEP - Free Report) reported second-quarter 2018 adjusted earnings per share (EPS) of $1.01, beating the Zacks Consensus Estimate of 88 cents by 14.8%.

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