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Exelon (EXC) Up 2.9% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Exelon (EXC). Shares have added about 2.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Exelon due for a pullback? 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 catalysts.

Exelon's Q1 Earnings Miss Estimates, Revenues Beat

Exelon Corporation reported first-quarter 2021 operating loss of 6 cents per share against the Zacks Consensus Estimate of earnings of 34 cents. In the year-ago quarter, the company reported earnings of 87 cents per share.

The year-over-year decline in earnings was primarily due to lower earnings from Exelon Generation owing to the impact of extreme cold weather conditions in February 2021.

On a GAAP basis, quarterly loss was 30 cents per share against net earnings of 60 cents in the year-ago quarter.

Total Revenues

Exelon's total revenues of $9,890 million surpassed the Zacks Consensus Estimate of $8,103 million by 22.1%. The top line also improved 13.1% from the year-ago figure of $8,747 million.

Highlights of the Release

Texas storms and subsequent generation outages resulted in an impact of 90 cents per share to operating earnings. The company expects to narrow some of that loss over the course of the year.

Exelon's total operating expenses increased nearly 33.9% year over year to $10,082 million.

Interest expenses were $386 million, down 5.8% from the year-ago quarter.

Exelon-operated nuclear plants at ownership achieved a 95.3% capacity factor for the quarter compared with 93.9% in first-quarter 2020.

Planned Separation

On Feb 25, 2021, Exelon announced that its board of directors approved a plan to separate the utilities business, comprising the company’s six regulated electric and gas utilities, and Exelon Generation, its competitive power generation and customer-facing energy businesses. This will create two publicly-traded companies with the necessary resources to best serve customers, and help it sustain long-term investment as well as operating excellence.

Subject to necessary approval, the company is expecting the completion of this separation in first-quarter 2022.

Hedges

Exelon's hedging program involves safeguarding of commodity risks for expected generation. As of Mar 31, 2021, the proportion of expected generation hedged is 94-97% for 2021.

Financial Highlights

Cash and cash equivalents were $1,908 million as of Mar 31, 2021 compared with $663 million on Dec 31, 2020.

Long-term debt was $36,248 million as of Mar 31, 2021 compared with $35,093 million on Dec 31, 2020.

Cash (used in)/from operating activities for first-quarter 2021 was ($1,261) million against $1,080 million in the first quarter of 2020.

Guidance

Exelon reaffirmed its 2021 earnings guidance in the range of $2.60-$3.00 per share. The midpoint of the above guided range is $2.80, higher than the Zacks Consensus Estimate of $2.79 per share for the period.

 

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Exelon has a poor Growth Score of F, a grade with the same score on the momentum front. However, 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 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 has been net zero. 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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