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Utilities Earnings Upbeat in Q4: ETFs in Focus

Sanghamitra Saha
·4-min read

The utilities sector has come up with mostly upbeat results this earnings season. All of S&P utilities companies in the sector have reported. About 60.7% beat on bottom line and 89.3% surpassed the top-line estimates, per the Earnings Trends issued on Mar 1, 2023. The sector’s earnings grew 7.55 in Q4 on 8.6% higher revenues.

Earnings in Focus

NextEra Energy: Upbeat Q4 Results; Soft Near-Term Outlook

In late January, NextEra Energy Inc. NEE reported fourth-quarter 2022 adjusted earnings of 51 cents per share, which beat the Zacks Consensus Estimate of 50 cents by 2%. The bottom line was also up 24.4% from the prior-year quarter. This year-over-year improvement was due to the solid performance of Florida Power & Light Company.

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For the fourth quarter, NextEra’s operating revenues were $6,164 million, which surpassed the Zacks Consensus Estimate of $5,743 million by 7.3%. The top line improved 22.2% year over year. The year-over-year improvement was due to strong performances from Florida Power & Light Company and NextEra Energy Resources.

NextEra Energy expects 2023 earnings in the range of $2.98-$3.13 per share. The midpoint of the range is $3.05 per share, lower than the Zacks Consensus Estimate of $3.11.

Duke Energy: Upbeat Q4 & Outlook

In early February, Duke Energy Corporation DUK reported fourth-quarter 2022 adjusted earnings of $1.11 per share, which surpassed the Zacks Consensus Estimate of $1.06 by 4.7%. The bottom line also improved 26.1% year over year.

Total operating revenues came in at $7,351 million, which improved 20.2% from $6,117 million in the year-ago period. The reported top line also surpassed the Zacks Consensus Estimate of $6,608 million by 11.2%.

Duke Energy reaffirmed its 2023 adjusted EPS guidance. The company still expects to generate adjusted EPS in the range of $5.55-$5.75. The Zacks Consensus Estimate for 2022 earnings, pegged at $5.63 per share, is lower than the midpoint of the company’s projected range. DUK now projects long-term EPS growth expectation in the range of 5-7% through 2027.

Dominion Energy: Upbeat Q4 & Outlook

In early February, Dominion Energy Inc. D reported fourth-quarter 2022 operating earnings of $1.06 per share, which surpassed the Zacks Consensus Estimate of $1.03 per share by 2.9%. Quarterly earnings were within the company’s guided range of 98 cents and $1.13 per share.

Dominion Energy’s total revenues were $4,913 million, which surpassed the Zacks Consensus Estimate of $4,196 million by 17.1%. Revenues improved by 26.6% from $3,880 million in the year-ago quarter.

Dominion has given first-quarter 2023 operating earnings guidance between 97 cents and $1.12 per share. Notably, the company reported earnings of $1.18 per share in the year-ago period. The mid-point of the guided range is $1.05, higher than the current Zacks Consensus Estimate of $1.03 per share for the same period.

Utility ETFs in Focus

In the current scenario, let’s discuss ETFs that have relatively high exposure to the above-mentioned utility companies:

Utilities Select Sector SPDR Fund XLU                 

The fund tracks the Utilities Select Sector Index. It comprises 30 holdings, with the above-mentioned companies carrying about 30% weight. Its AUM is $14.18 billion and expense ratio is 0.10%. The fund has lost 4.5% past month (as of Mar 1, 2023). It carries a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook.

Vanguard Utilities ETF VPU

The fund tracks the MSCI US Investable Market Utilities 25/50 Index and includes stocks of companies that distribute electricity, water, or gas or that operate as independent power producers. It comprises about 65 holdings, with the above-mentioned companies constituting 26.5%. Its AUM is $5.21 billion and expense ratio is 0.10%. It has lost 4.7% past month. It carries a Zacks ETF Rank #3, with a Medium-risk outlook.

iShares U.S. Utilities ETF IDU

The Vanguard Utilities ETF seeks to track the performance of the MSCI US Investable Market Index Utilities 25/50. It comprises 44 holdings, with the above-mentioned companies constituting 26%. Its AUM is $936.5 million and expense ratio is 0.39%. It has decreased about 4.3% past month. The fund carries a Zacks ETF Rank of 3, with a Medium-risk outlook.

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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

Dominion Energy Inc. (D) : Free Stock Analysis Report

Utilities Select Sector SPDR ETF (XLU): ETF Research Reports

Vanguard Utilities ETF (VPU): ETF Research Reports

iShares U.S. Utilities ETF (IDU): ETF Research Reports

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Zacks Investment Research