Most large U.S.-based power companies either surpassed or met Wall Street's earnings expectations in the fourth quarter of 2017, an analysis of S&P Global Market Intelligence shows.
Like a year ago, Entergy Corp. again topped the list of Canadian and U.S. power companies in beating analyst EPS estimates by a wide margin. The company reported fourth-quarter 2017 operational earnings of 76 cents per share, beating the S&P Capital IQ normalized consensus estimate of 46 cents per share by 65.22%.
Calling it a "solid beat," Guggenheim Securities LLC analysts said the result reflects higher realized gains on decommissioning trust at lower-than-expected expenses at Entergy Wholesale Commodities. The brokerage reiterated its "buy" rating on the company and raised its price target to $94 from $88.
Edison International ranked second on the list, reporting core earnings of $1.10 per share and surpassing the consensus estimate of 92 cents per share. Amid challenges related to the California wildfires, the company posted higher earnings in the quarter thanks to its better-than-expected cost performance, and strong operating performance and tax benefits at Southern California Edison Co.
Although Guggenheim analysts called California a "relative mess" on matters involving the wildfires, but felt comfortable on the sustainability of Edison International's dividend. This prompted the brokerage to upgrade Edison International to "buy" from "neutral" and raise its price target to $71 from $68.
Landing on the third spot, Ameren Corp.'s fourth-quarter 2017 earnings of 39 cents per share came above the consensus estimate of 34 cents per share by 14.71%. A change in the timing of interim period revenue recognition at Ameren Illinois Electric Distribution increased Ameren's core earnings by 12 cents per share, the company said.
Eversource Energy and Fortis Inc.'s fourth-quarter earnings were in line with the consensus estimates of S&P Capital IQ. Eversource reported earnings of of 75 cents per share, while Fortis booked earnings in U.S. dollars of 49 cents per share.
The companies, which missed analyst expectations, were Exelon Corp., PG&E Corp., NextEra Energy Inc. and Xcel Energy Inc.
Xcel Energy reported earnings of 42 cents per share, missing the consensus estimate by one cent. PG&E, which topped the list in the third quarter of 2017, slipped to the 18th position on the list of 20 Canadian and U.S. power companies.
PG&E's earnings declined year over year to 63 cents per share, missing the consensus estimate of 65 cents per share by 3.08%. Despite this miss, Macquarie Capital (USA) Inc. reiterated its "outperform" rating on the company. The brokerage kept its equity assumptions unchanged and held an optimistic view about the fixes to California's inverse condemnation law.
Meanwhile, NextEra's fourth-quarter adjusted earnings of $1.25 per share missed analyst expectations by 6 cents. The result, however, was an increase from adjusted EPS of $1.21 per share a year earlier.
Exelon came in at the last spot, after posting fourth-quarter adjusted earnings of 55 cents per share, compared with the consensus estimate of 60 cents per share. The result, however, was a year-over-year increase due to regulatory rate increases, weather and the New York zero-emissions credit.
Macquarie analysts also maintained its "outperform" rating on Exelon given the company's 8% EPS compound annual growth rate through 2021. "The growth, at the high end of management's guidance, is among the highest among regulated electric utilities, with further upside from higher realized ROEs at [Pepco Holdings LLC] and [Commonwealth Edison Co.], given that ComEd's allowed ROE is linked to the 30yrTyield," said Macquarie analysts.
S&P Global Market Intelligence and S&P Capital IQ are owned by S&P Global Inc.