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Eversource (ES) Down 19.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Eversource Energy (ES - Free Report) . Shares have lost about 19.5% in that time frame, outperforming the S&P 500.

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

Eversource Q4 Earnings and Revenues Miss Estimates

Eversource Energy reported fourth-quarter 2019 operating earnings of 76 cents per share, lagging the Zacks Consensus Estimate of 78 cents by 2.6%. However, the reported earnings improved 4.1% year over year.
 
Total Revenues

Fourth-quarter revenues of $2,050.4 million lagged the Zacks Consensus Estimate of $2,231 million by 8.1%. However, total revenues improved 0.8% from the year-ago figure of $2,034.9 million.

Highlights of the Release

Operating expenses decreased 1.2% year over year to $1,614.8 million, primarily owing to lower amortization costs.

Operating income was up 8.9% from the prior-year quarter to $435.6 million. Interest expenses increased 5.9% year over year to $133.6 million in the quarter.

Net income in the quarter under review was $250.1 million, up 8.1% from $231.3 million recorded in the year-ago period.

Segmental Performance

Electric Distribution: Earnings from this segment were $90.7 million, up 19% from the prior-year quarter. The upside was primarily attributable to higher distribution revenues, partially offset by increased depreciation cost, and operations and maintenance (O&M) expense.

Electric Transmission: Earnings of the segment were up 21.1% year over year to $118.1 million. The upside was due to increased investment in Eversource Energy’s transmission facilities.

Natural Gas Distribution: This segment’s earnings were down 10.2% year over year to $38.6 million. The segment’s weak results were due to higher O&M and depreciation expenses.

Water Distribution: Earnings from this segment were $8.5 million compared with $4.5 million in the year-ago quarter.

Eversource Parent & Other Companies: The segment’s loss was $5.9 million against earnings of $10.1 million in the year-ago quarter. The weak results were due to higher effective tax rate.

Guidance


Eversource provided its 2020 earnings guidance in the range of $3.60-$3.70 per share. The midpoint of management’s 2020 EPS guidance is $3.65, which is higher than the current Zacks Consensus Estimate of $3.63 for the period.

The company expects earnings to improve 5-7% through 2024 from the 2019 base of $3.45.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, Eversource has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. 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 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 these revisions has been net zero. Notably, Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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