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Con Ed (ED) Up 6.2% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Consolidated Edison (ED - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.

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

Consolidated Edison Q3 Earnings Beat, Revenues Up Y/Y

Consolidated Edison reported third-quarter 2018 adjusted earnings of $1.56 per share, which surpassed the Zacks Consensus Estimate of $1.48 by 5.4%. The bottom line also improved 6.1% from $1.47 per share in the year-ago period.

Barring a one-time benefit, the company posted GAAP earnings of $1.40 per share, reflecting an annual decline of 5.4%. This year-over-year downside was driven by higher operating expenses.

Total Revenues

In the reported quarter, total revenues of $3,328 million outshined the Zacks Consensus Estimate of $3,172 million by 4.9%. Moreover, the top line rose 3.6% from $3,211 million in the year-ago quarter.

Electric revenues totaled $2,783 million, up 4% from the prior-year period figure of $2,675 million. Gas revenues were up 0.7% to $298 million. Steam revenues rose 3.2% to $64 million. Non-utility revenues amounted to $183 million, up 2.8% from $178 million in the year-earlier quarter.

Operating Statistics

Total operating expenses in the third quarter increased 8.9% year over year to $2,502 million.

Purchase power, fuel expenses, gas purchased for resale, depreciation and amortization as well as taxes and other than income taxes were up 18.5%, 30%, 42.6%, 6.8% and 9.7%, respectively, from the prior-year quarter numbers. However, other operations and maintenance slipped 1.7% year over year.

Financials

Cash and temporary cash investments as of Sep 30, 2018 summed $199 million compared with $797 million as of Dec 31, 2017.

Long-term debt was $15,480 million as of Sep 30, 2018 compared with $14,731 million at 2017 end.

At the end of third-quarter 2018, cash from operating activities amounted to $1,600 million compared with $2,227 million in the prior-year period.

Guidance

For 2018, the company continues to expect adjusted earnings per share in the $4.25-$4.35 range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Con Ed has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Con Ed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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