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ETFs in Focus After Dominion Resources Q1 Results

Zacks Equity Research
Updated

Shares of Dominion Resource Inc D closed 0.95% higher at market close on Thursday, May 4, 2017, owing to better-than-expected results. The company reported a year-over-year increase of 15.85% in net quarterly revenues.


Q1 Performance


Dominion reported non-GAAP earnings per share of $0.97, which came ahead of the Zacks Consensus Estimate and the year-ago earnings of $0.96. Moreover, revenues of $3.384 billion beat the consensus mark of $3.365 billion. Income from operations rose to $1.125 billion from $882 million a year earlier.


Operating Earnings


Dominion Virginia Power reported operating earnings of $125 million, up from $120 million a year ago.

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Dominion Energy reported operating earnings of $263 million, up from $186 million a year ago.


Dominion Generation reported operating earnings of $261 million, up from $245 million a year ago.


Corporate and other reported operating loss of $38 million against a gain of $21 million a year ago.


Outlook


Dominion Resources expects full-year 2017 operating earnings to be in the range of $3.40-$3.90 per share and second quarter operating earnings in a band of $0.60-$0.70 per share.


In the current scenario, we believe it is prudent to discuss the following ETFs that have a relatively high exposure to Dominion.


VanEck Vectors Uranium+Nuclear Energy ETF NLR


This fund seeks to provide exposure to uranium, a key component in the nuclear power industry. NLR is an expensive bet on the energy sector. This fund has AUM of $30.6 million and charges a fee of 61 basis points a year. It has 7.98% allocation to Dominion Resources (as of May 4, 2017). It closed 0.36% higher at market close on Thursday, May 04, 2017. The fund returned 4.10% in the past one year and 4.36% in the year-to-date time frame (as of May 4, 2017).


Utilities Select Sector SPDR Fund XLU


XLU is one of the most popular funds in the utility space. It primarily provides exposure to the U.S. companies involved in electricity or natural gas. The fund has AUM of $7.36 billion and is a relatively cheaper bet as it charges a fee of 14 basis points a year. It has a 7.51% allocation to Dominion Resources (as of May 4, 2017). It closed 0.39% higher at market close on Thursday, May 04, 2017. The fund returned 5.37% in the past one year and 5.93% in the year-to-date time frame (as of May 4, 2017). It currently has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook (read: Are the Q4 Earnings Clouds Clearing for Utility ETFs?).


iShares U.S. Utilities ETF IDU


This ETF offers targeted exposure to U.S. utility companies. It has AUM of $797.4 million and charges a fee of 44 basis points a year. It has a 6.43% allocation to Dominion Resources (as of May 3, 2017). It closed 0.37% higher at market close on Thursday, May 04, 2017. The fund returned 5.21% in the past one year and 5.52% in the year-to-date time frame (as of May 4, 2017). It currently has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook (read: 4 Sector ETFs to Profit from if Geopolitics Rule).


Below is a chart comparing the performance of the funds and Dominion Resources:

 


Source: Yahoo Finance


To Conclude


Though Dominion reported better-than-expected results, it currently has a Zacks Rank #3 (Hold). Its share performance has been moderate in the past year (up 8.46%) and year-to-date time frame (up 0.93%). Therefore, we believe the current scenario calls for being on the sidelines for now.


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Dominion Resources, Inc. (D): Free Stock Analysis Report
 
SPDR-UTIL SELS (XLU): ETF Research Reports
 
VANECK-URNM+NUC (NLR): ETF Research Reports
 
ISHARS-US UTIL (IDU): ETF Research Reports
 
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Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report