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Why Is Edison International (EIX) Up 3.4% 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 added about 3.4% in that time frame, outperforming the S&P 500.

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

Edison International's Q4 Earnings Miss, Revenues Beat

Edison International reported fourth-quarter 2018 adjusted earnings of 94 cents per share, which missed the Zacks Consensus Estimate of $1.00 by 6%. The bottom line also decreased 14.5% from $1.10 registered in the year-ago quarter.

Excluding adjustments, quarterly earnings came in at $4.49 per share from continuing operations compared with $1.67 in fourth-quarter 2017.

For 2018, the company’s adjusted earnings of $4.15 per share lagged the Zacks Consensus Estimate of $4.16 by a penny. The reported figure also decreased 7.8% from $4.50 in the prior year.

Total Revenues

Edison International's fourth-quarter revenues came in at $3.01 billion, surpassing the Zacks Consensus Estimate of $2.90 billion by 3.8%. However, the top line declined 6.6% from the year-ago quarter’s $3.22 billion.

For 2018, the company’s revenues totaled $12.66 million, which missed the Zacks Consensus Estimate of $12.74 billion by 0.6% but improved 2.7% from the year-ago quarter’s $12.32 billion.

Operational Highlights

In the reported quarter, total operating expenses increased 55% to $5,050 million mainly on account of wildfire-related costs, which was absent in the prior-year quarter. Operation and maintenance costs decreased 10.3% year over year, while purchased power and fuel costs dropped 6.1%. Depreciation and amortization expenses also declined 5.1%.

Edison International incurred an operating loss of $2,041 million compared with a loss of $38 million incurred in the year-ago quarter.

Interest expenses were $196 million, higher than $166 million recorded in the prior-year quarter.

Segment Results

Southern California Edison’s (SCE) fourth-quarter earnings were $4.38 per share compared with 33 cents a year ago. The upside resulted from the impact of the July 2017 cost of capital decision on GRC revenues, increased operation and maintenance expenses related to vegetation management and higher net financing costs.

The Parent and Other segment incurred a loss of 11 cents per share in the quarter under review compared with the year-ago loss of $1.34. The improvement can be attributed to the absence of a $433 million write-down from the re-measurement of deferred taxes as a result of the Tax Reform recorded in 2017.

Financial Update

As of Dec 31, 2018, cash and cash equivalents were $144 million compared with $1,091 million as of Dec 31, 2017. Long-term debt amounted to $14.63 billion, higher than the 2017-end level of $11.64 billion.

Net cash from operating activities during 2018 was $3,177 million compared with $3,597 million in the prior year. Total capital expenditures summed $4,509 million at 2018 end, up from $3,844 million a year ago.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted 8.23% due to these changes.

VGM Scores

At this time, Edison International 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 C. 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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