It has been about a month since the last earnings report for Xcel Energy (XEL). Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Xcel 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.
Xcel Energy Q2 Earnings Beat Estimates, Revenues Miss
Xcel Energy posted second-quarter 2020 operating earnings of 54 cents per share, surpassing the Zacks Consensus Estimate of 46 cents by 17.4%. The bottom line also increased 17.4% from the year-ago earnings of 46 cents per share.
While there was a drop in sales due to the pandemic, earnings benefited from favorable weather conditions and the company’s cost-management efforts.
Xcel Energy’s second-quarter revenues of $2,586 million missed the Zacks Consensus Estimate of $2,759 million by 6.3%. However, the top line improved 0.3% from the prior-year quarter’s $2,577 million. This upside was owing to higher contribution from the electric segment than the prior-year quarter.
Electric: Revenues rose 1.7% to $2,286 million from $2,249 million in the year-ago quarter.
Natural Gas: Revenues fell 9.1% from the year-ago quarter to $280 million.
Other: Revenues in the segment grossed $20 million, on par with the year-ago figure.
Total operating expenses slid 0.1% year over year to $2,164 million, primarily owing to lower operating and maintenance expenses, and cost of natural gas sold and transported.
Operating income in the reported quarter inched up 2.9% from the prior-year quarter to $422 million.
Total interest charges and financing costs in the reported quarter rose 9.5% from the prior-year figure to $196 million.
Xcel Energy reaffirmed its 2020 earnings per share guidance in the range of $2.73-$2.83. The company expects to deliver long-term annual EPS growth of 5-7% based on the 2019 reported figure of $2.60 per share, which represents the mid-point of the original 2019 guided range of $2.55-$2.65 per share.
Xcel Energy projects an annual dividend rate hike of 5-7% and targets a payout ratio of 60-70%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
Currently, Xcel has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Xcel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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