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Thursday's Energy Stocks: FirstEnergy sinks with PPA ruling; AEP drops as earnings disappoint

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Thursday's Energy Stocks: FirstEnergy sinks with PPA ruling; AEP drops as earnings disappoint

Investorsexited FirstEnergy Corp.and American Electric Power Co. Inc.shares on Thursday, April 28, following FERC's decision to revoke waivers of affiliate power sales restrictions grantedto the companies' Ohio utilities. As a result, the controversial affiliate powerpurchase agreements that are the centerpiece of an Ohio generation subsidy planwill have to be filed with FERC, and the agency will have to approve them beforethey can be implemented.

FirstEnergyshares tumbled 9.93% to $32.47 and AEP dropped 1.36% to $63.06, both in brisk trading.

S&PCapital IQ also downgraded FirstEnergy shares to "hold" from "buy"and maintained AEP shares at "hold." The analysts, however, raised their12-month targets by $2 to $37 for FirstEnergy and by $4 to $62 for AEP, due to higherpeer valuations.

Beforethe session, AEP reportedfirst-quarter 2016 operating earnings that were below analyst estimates.

"Thefirst three months of 2016 were vastly different from a year ago. The unseasonablymild temperatures reduced earnings by 12 cents compared with last year. The warmwinter and low natural gas prices also resulted in significantly lower power pricesand sales volumes compared with the first quarter of 2015," AEP Chairman, Presidentand CEO Nicholas Akins said in a statement.

Powerproducer Dynegy Inc.,which welcomed FERC'sdecision to revoke the waivers, saw its shares down 0.17% to $17.30 in average trading.

climbed 1.81%in weak trading to close at $44.39 after reportingfirst-quarter 2016 operating earnings of $84.5 million, or 55 cents per share. TheS&P Global Market Intelligence normalized EPS consensus estimate was 52 cents.

fell 0.36% inbelow-average volume to finish at $116.47 after its first-quarter adjusted earnings of $1.55 per share beat theS&P Global Market Intelligence normalized EPS consensus estimate of $1.39.

"Strongperformance was driven by new renewable and gas pipeline investment, as well ascontinued regulated utility investment at [FloridaPower & Light Co.], said Guggenheim Securities LLC analysts in anApril 28 investor note. "Management maintained their 2016 outlook for $5.85-$6.35and $6.60-$7.10 in 2018, implying their 6-8% growth trajectory is intact, and inline with our updated 2016 estimate of $6.35 and 2017/2018 estimates of $6.60/7.04."

gained0.10% in weak trading to close at $38.85 after boosting its quarterly dividend by 6.7%. Although WilliamsCapital Group analyst Chris Ellinghaus called the dividend hike "impressive,"he noted: "Despite the dividend increase, we remain cautious on [Portland GeneralElectric] shares over the near-term based on likely weak, weather driven EPS resultson [April 29], and further details of Carty plant construction progress."

Gas utilityQuestar Corp. lost 0.12%in thin trading to end at $25.08 after reportingfirst-quarter 2016 adjusted earnings of $87.5 million, or 50 cents per share. TheS&P Global Market Intelligence consensus estimate of normalized EPS for thequarter was 51 cents.

Leaningmore heavily on the utility side of its business, Questar is working on its midstream asset base,company executives said April 28.

In themidstream space, Enterprise ProductsPartners LP shed 1.22% in light trading to close at $26.80 after first-quarter net incomeattributable to limited partners of $661.2 million, or 32 cents per unit. The S&PGlobal Market Intelligence consensus normalized EPS estimate for the first quarterwas 33 cents.

declined 3.29% in heavytrading to close at $70.06 after reportinga drop in first-quarter earnings. Shares of subsidiary EQT Midstream Partners LP moved the opposite course, climbing0.61% to $78.05, after recording higher first-quarter income that beat the analystestimates.

gained4.19% in strong volume to end at $12.43 after acquiring a 66.7% stake in the Okeanos pipeline from an affiliateof its general partner, and MemorialProduction Partners lifted 3.33% in above-average trading to finishat $2.79 after agreeingto acquire Memorial Production PartnersGP LLC for $750,000 to become a stand-alone entity.

The SNLMidstream Energy Index settled 1.80% lower to 107.47.

fell 2.72%in strong volume to finish at $2.50 after reportingthat its first-quarter net loss widened to $36.4 million. The company also reducedits full-year coal shipment guidance given the slow start to the year.

Amongother coal stocks, Alliance ResourcePartners LP rose 3.41% in active trading to end at $16.37, lost 2.54%in above-average trading to close at $9.60 and Foresight Energy LP gained 1.46% in weak volume to finishat $2.09. The SNL Coal Index dipped 1.47% to 52.08.

The DowJones Industrial Average fell 1.17% to 17,830.76 and the S&P 500 dropped 0.92%to 2,075.81.

Market prices and index valuesare current as of the time of publication and are subject to change.