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Why Is WEC Energy (WEC) Down 8.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for WEC Energy Group (WEC - Free Report) . Shares have lost about 8.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is WEC Energy due for a breakout? 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 catalysts.

WEC Energy Q4 Earnings Beat Estimates, Revenues Miss

WEC Energy delivered fourth-quarter 2019 adjusted earnings per share of 77 cents, which beat the Zacks Consensus Estimate of 72 cents by 6.94%. The bottom line increased from the year-ago quarter’s tally of 65 cents by 18.5%.

In 2019, the company generated earnings of $3.58 per share compared with adjusted earnings of $3.34 per share in 2018.

Revenues

Total revenues amounted to $1,947.5 million, which missed the Zacks Consensus Estimate of $2,113 million by 7.83%. The reported figure declined from $2,076.8 million in the year-ago quarter.

The company generated $7,523.1 million revenues in 2019, down 2.03% from $7,679.5 million in 2018.

Highlights of the Release

Residential use of electricity in 2019 fell 2.5% year over year. Electricity consumption by small commercial and industrial customers declined 2.5% year on year. Electricity used by large commercial and industrial customers, excluding iron ore mines, dropped 3.5% on a year-over-year basis. On a weather-normal basis, retail deliveries of electricity, excluding the iron ore mine, inched down 1.7%.

Natural gas deliveries in Wisconsin, excluding gas used for power generation, moved up 2.6% during 2019. On a weather-normal basis, natural gas deliveries improved 1.8%.

At the end of 2019, the company had an additional 10,000 electric and 14,000 natural gas customers compared with the year-ago quarter’s level.

Financial Position

As of Dec 31, 2019, WEC Energy had cash and cash equivalents of $37.5 million compared with $84.5 million as of Dec 31, 2018.
 
As of Dec 31, 2019, the company had long-term debt of $11.2 billion, up almost 12.2% from 2018-end level.

The company’s net cash provided by operating activities at the end of 2019 was $2.3 billion compared with $2.4 billion in the year-ago period.

Capital expenditure at the end of 2019 was $2.3 billion, up from $2.1 billion a year ago.

Guidance

The company reaffirmed 2020 earnings per share guidance in the range of $3.71-$3.75. The projection is in line with its long-term objective of achieving earnings growth rate of 5-7% on an annual basis. The midpoint of the current guidance is $3.73, which is lower than the Zacks Consensus Estimate of $3.74.

 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, WEC Energy has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 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

WEC 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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