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Con Ed (ED) Down 23.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Consolidated Edison (ED - Free Report) . Shares have lost about 23.3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Con Ed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Consolidated Edison Q4 Earnings Top, Revenues Miss

Consolidated Edison Inc. reported fourth-quarter 2019 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate of 79 cents by 8.9%.

Including one-time adjustments, the company posted GAAP earnings of 88 cents per share, reflecting 16.2% year-over-year decline. This downside can be attributed to lower operating income recorded in the reported quarter.

For 2019, the company recorded earnings of $4.38 per share, which surpassed the Zacks Consensus Estimate of $4.31. The full-year top line rose 1.2% year over year.

Total Revenues

In the reported quarter, the company’s total revenues of $2,951 million missed the Zacks Consensus Estimate of $3,033 million by 2.7%. The top line was almost flat when compared with $2,949 million in the year-ago quarter.

For 2019, the company’s total revenues of $12.57 billion missed the Zacks Consensus Estimate of $12.64 billion by 0.6%. The full year top line rose 1.9% when compared to $12.34 billion in the prior year.

Electric revenues totaled $2,029 million in the fourth quarter, up 1.4% from the prior-year quarter’s $2,001 million. Gas revenues remained flat year over year at $601 million. Steam revenues inched up 0.6% to $158 million.

Meanwhile, non-utility revenues amounted to $164 million, down 13.7% from $190 million in the year-earlier quarter.

Operating Statistics

Total operating expenses in the fourth quarter declined 1.5% year over year to $2,386 million.

Purchase power, fuel, gas purchased for resale along with other operations and maintenance expenses decreased 3.9%, 30.6%, 31.7 and 1.2%, respectively, from the prior-year quarter numbers. However, depreciation and amortization expenses as well as tax, other than income taxes, increased 14.6% and 8.4% year over year, respectively.    

Financials

Cash and temporary cash investments as of Dec 31, 2019 were $981 million compared with $895 million as of Dec 31, 2018.

Long-term debt was $18,527 million as of Dec 31, 2019, compared with $17,495 million at 2018 end.

At the end of 2019, cash from operating activities amounted to $3,134 million compared with $2,695 in the prior year.

2020 Guidance

For 2020, the company expects to generate adjusted earnings per share in the range of $4.30-$4.50. The Zacks Consensus Estimate for full-year earnings is pegged at $4.49, closer to the upper end of the company guided range.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Con Ed has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, 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 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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