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Why Is Edison International (EIX) Down 21.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for Edison International (EIX - Free Report) . Shares have lost about 21.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Edison International 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.

Edison International Beats on Q3 Earnings & Revenues

Edison International reported third-quarter 2018 earnings per share of $1.56 from continuing operations, beating the Zacks Consensus Estimate of $1.31 by 19.1%. The bottom line also increased 9.1% from $1.43 in the  year-ago quarter.

Excluding adjustments, the company reported quarterly earnings of $1.57 per share compared with $1.44 in third-quarter 2017.

Total Revenues

Edison International's third-quarter revenues came in at $4,269 million, surpassing the Zacks Consensus Estimate of $3,618 million by 18%. Moreover, the top line also improved 16.3% from the year-ago quarter’s $3,672 million.

Operational Highlights

In the reported quarter, total operating expenses increased 13.2% to $3,530 million, mainly on account of higher purchased power and fuel expenses (29.3%). Meanwhile, operation and maintenance costs dropped 6.5%.

Depreciation and amortization expenses declined 11% and property and other taxes dipped 1%.

Operating income surged 33.6% to $739 million in the reported quarter.

Interest expenses were $188 million, higher than $162 million reported in the prior-year quarter.

Segment Results

Southern California Edison’s (SCE) third-quarter earnings were $1.64 per share compared with $1.43 a year ago. The increase in core earnings resulted from lower operation and maintenance expenses due to regulatory  deferrals for line clearing and wildfire insurance costs, favorable impact of Tax Reform on incremental pre-tax earnings and higher revenues, owing to a reimbursement for spent nuclear fuel storage costs recorded in 2018.

Parent and Other segment posted third-quarter losses of 7 cents per share, against the year-ago earnings of a cent. The increase in core losses was due to the impact of Tax Reform in 2018 and absence of tax benefits  recorded in 2017.

Financial Update

As of Sep 30, 2018, cash and cash equivalents were $71 million compared with $1,071 million as of Dec 31, 2017. Long-term debt was $14.63 billion, higher than the 2017-end level of $11.64 billion.

Net cash from operating activities during the first nine months of 2018 was $2,271 million compared with $2,698 million in the year-ago quarter. Total capital expenditure amounted to $3,241 million in the nine months ended  Sep 30, 2018, up from $2,674 million a year ago.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -13.01% due to these changes.

VGM Scores

Currently, Edison International has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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

Edison International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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