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Why Is Con Ed (ED) Up 6.1% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Consolidated Edison (ED). Shares have added about 6.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Con Ed 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.

Consolidated Edison Q4 Earnings Beat, Revenues Down Y/Y

Consolidated Edison reported fourth-quarter 2018 adjusted earnings of 77 cents per share, which surpassed the Zacks Consensus Estimate of 76 cents by 1.3%. The bottom line, however, decreased 3.8% from 80 cents per share registered a year ago.

Barring a one-time benefit, the company posted GAAP earnings of $1.06 per share, reflecting a 35% decline year over year. This downside was on account of lower revenues as well as higher operating expenses.

For 2018, Consolidated Edison’s adjusted earnings came in at $4.33 per share, which outpaced the Zacks Consensus Estimate of $4.31 by 0.5%. The reported figure also improved 5.1% from $4.12 per share in the prior year.

Total Revenues

In the reported quarter, the company’s total revenues of $2,949 million outshined the Zacks Consensus Estimate of $2,802 million by 5.2%. However, the top line declined 0.4% from $2,961 million in the year-ago quarter.

For 2018, Consolidated Edison generated total revenues of $12.34 billion, which exceeded the Zacks Consensus Estimate of $12.14 billion by 1.6%. The top line also rose 2.5% from $12.03 million in the prior year.

Electric revenues totaled $2,001 million in the fourth quarter, down 1.9% from the prior-year figure of $2,039 million. Gas revenues were up 11.3% to $601 million. Steam revenues also rose 6.8% to $157 million. Non-utility revenues amounted to $190 million, down 19.1% from $235 million registered in the year-earlier quarter.

Operating Statistics

Total operating expenses in the fourth quarter rose 2% year over year to $2,423 million.

Purchase power, fuel expenses, gas purchased for resale, depreciation, and amortization as well as taxes and other than income taxes increased 2.6%, 31.9%, 36.6%, 10.2% and 0.2%, respectively, from the prior-year quarter numbers. However, other operations and maintenance declined 11.1% year over year.

Financials

Cash and temporary cash investments as of Dec 31, 2018, summed $895 million compared with $797 million as of Dec 31, 2017.

Long-term debt was $17,495 million as of Dec 31, 2018, compared with $14,731 million at 2017 end.

At the end of 2018, cash from operating activities amounted to $2,695 million compared with $3,367 million a year ago.

2019 Guidance

For 2019, the company expects adjusted earnings per share to be in the $4.25-$4.45 range. The Zacks Consensus Estimate for the same is pegged at $4.32, lower than the midpoint of the company’s guided range.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -6.32% due to these changes.

VGM Scores

Currently, Con Ed has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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