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Exelon (EXC) Up 6.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Exelon (EXC - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Exelon 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.

Exelon Posts In-Line Q3 Earnings, Tweaks Guidance

Exelon Corporation’s third-quarter 2018 operating earnings of 88 cents per share were on par with the Zacks Consensus Estimate. Quarterly earnings were 3.5% higher than the year-ago figure of 85 cents. The reported earnings were toward the higher end of the guided range of 80-90 cents per share.

The company’s year-over-year improvement in earnings was due to strong contribution from utility and power businesses.

On a GAAP basis, its quarterly earnings were 76 cents per share compared with 85 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $9,403 million surpassed the Zacks Consensus Estimate of $8,420 million by 11.7%.

Quarterly revenues also improved 7.3% from $8,768 million reported in the year-ago quarter.

Quarterly Highlights

Exelon's total operating expenses increased 13.4% year over year to $8,252 million. The increase in expenses was due to higher operating and maintenance expenses, along with purchased power and fuel costs in the reported quarter.

Interest expenses were $393 million, higher than $386 million in the year-ago quarter.

Commonwealth Edison Company (ComEd) completed the installation of smart meters 3 years ahead of original schedule and that too at less than $20 million from the estimated budget. This indicates the capability of the company to efficiently execute plans.

Hedges

Exelon's hedging program involves safeguarding of commodity risks for expected generation, typically on a ratable basis, over a three-year period. The proportion of expected generation hedged as of Sep 30, 2018 was 98-101% for 2018, 82-85% for 2019 and 48-51% for 2020.

Financial Highlights

Cash and cash equivalents were $1,918 million as of Sep 30, 2018, up 113.6% from Dec 31, 2017 level.
 
Long-term debt was $34,519 million as of Sep 30, 2018, higher than $32,176 million on Dec 31, 2017.

In the first nine months of 2018, the company made capital investments of $5,497 million, down from $5,556 million invested in the year-ago period.

Guidance

Exelon raised the lower end of its 2018 earnings per share guided range to $3.05-$3.20 from $2.90-$3.20 expected earlier.

The company continues to work on its cost-saving initiatives to bring about identified total savings of more than $900 million since 2015.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Exelon has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Exelon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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