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Why Is Dominion Energy (D) Up 5.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for Dominion Energy (D - Free Report) . Shares have added about 5.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Dominion Energy due for a pullback? 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.

Dominion Beats Q3 Earnings Estimates, Narrows Guidance

Dominion Energy Inc. reported third-quarter 2018 operating earnings of $1.15 per share, beating the Zacks Consensus Estimate of $1.11 by 3.6%. Operating earnings came in at the higher end of the guided range of 95 cents to $1.15 per share.

Also, operating earnings increased 10.6% from $1.04 reported a year ago. The year-over-year improvement was attributable to contribution from the Cove Point Liquefaction project, and the positive impact of tax reforms.

GAAP earnings were $1.30 per share compared with $1.03 in the year-ago quarter. The difference between GAAP and operating earnings was due to one-time gain on nuclear decommissioning trust funds.

Total Revenues

Dominion’s total revenues came in at $3,451 million, beating the Zacks Consensus Estimate of $3,326 million by 3.8% and also improving 8.6% from $3,179 million in the year-ago quarter.

Highlights of the Release

Total operating expenses increased 13.5% year over year to $2,301 million due to higher electric fuel prices, and increase in operating and maintenance expenses.

Interest and related charges in the reported quarter were $378 million, up 23.9% from the year-ago quarter.

In the reported quarter, Power Delivery’s electric customer base increased by 26,307 from the prior-year quarter. Electricity consumption volumes also improved 4.4% year over year to 24,000 GWh in the third quarter.

The company’s net income in the reported quarter was $758 million, up 12.8% year over year.

Segment Details

Power Delivery: Net income from this segment was $163 million, up 18.1% year over year.

Power Generation: The segment’s net income was $414 million, increasing 12.2% year over year.

Gas Infrastructure: Net income from this segment was $264 million, up 41.2% on a year-over-year basis.

Corporate and Other: The segment’s net loss was $83 million compared with $22 million in the year-ago quarter.

Financial Update

Cash and cash equivalents as of Sep 30, 2018 was $310 million compared with $120 million on Dec 31, 2017.

Long-term debt as of Sep 30, 2018 was $27.30 billion compared with $25.58 billion at the end of 2017.

Cash from operating activities in the first nine months of 2018 was $3.71 billion, up 1.1% from $3.67 billion in the corresponding period of 2017.



Outlook

For fourth-quarter 2018, Dominion expects operating earnings within 80-95 cents per share compared with 91 cents in fourth-quarter 2017. Positive drivers include commercial operation of the Cove Point Liquefaction project and the benefit of tax reform, offset by higher share count and financing costs.

For the full year, Dominion narrowed its earnings per share guidance to the range of $3.95-$4.10 from earlier expectation of $3.80-$4.25.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -11.56% due to these changes.

VGM Scores

At this time, Dominion Energy has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Dominion 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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