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Exelon (EXC) Down 19.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Exelon (EXC - Free Report) . Shares have lost about 19.2% in that time frame, underperforming the S&P 500.

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

Exelon Q4 Earnings Surpass Estimates, Revenues Miss

Exelon Corporation’s fourth-quarter 2019 operating earnings of 83 cents per share surpassed the Zacks Consensus Estimate of 73 cents by 13.6%. Also, the reported earnings were 43.1% higher than the year-ago figure of 58 cents.
 
The year-over-year increase in earnings was due to rate increases at PECO, BGE and PHI, lower operating expenses, higher realized energy prices and decrease in nuclear outage days.

On a GAAP basis, its quarterly earnings were 79 cents per share compared with 16 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $8,343 million lagged the Zacks Consensus Estimate of $9,231 million by 9.6%. The top line also declined 5.3% from the year-ago figure of $8,812 million. The year-over-year decline in revenues was due to lower contribution from Generation, BGE and ComEd businesses.

Highlights of the Release

Exelon's total operating expenses decreased 8.8% year over year to $7,394 million. The decline in total expenses was due to lower power and fuel costs, as well as operating and maintenance expenses.

Interest expenses were $395 million, down 5.1% from $416 million in the year-ago quarter.

The company efficiently served 0.9% and 1% more electric and natural gas customers, respectively, than 2018 levels.

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 Dec 31, 2019 was 91-94% for 2020 and 61-64% for 2021.

Financial Highlights

Cash and cash equivalents were $587 million as of Dec 31, 2019 compared with $1,349 million in the corresponding period of 2018.

Long-term debt was $31,329 million as of Dec 31, 2019 compared with $34,075 million in the comparable period of 2018.

Cash from operating activities in 2019 was $6,659 million compared with $8,644 million in 2018.

Guidance

Exelon’s guidance for 2020 earnings is projected in the range of $3.00-$3.30 per share. The company recorded earnings of $3.22 per share in 2019. The midpoint of the above guided range is $3.15, higher than the current Zacks Consensus Estimate for the period of $3.02. Exelon plans to invest $26 billion in the 2020-2023 time period to strengthen existing operations.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Exelon has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, 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 this revision indicates a downward shift. 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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