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Sempra tops list of US utility ranking against Wall Street expectations for Q1

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Sempra tops list of US utility ranking against Wall Street expectations for Q1

Two California utilities found themselves on the opposite ends of a ranking by performance against analyst expectations for the first quarter of 2019, as the impacts of catastrophic wildfires continue to impact financial results.

Sempra Energy ranked first among Canadian and U.S. power companies in beating expectations of Wall Street analysts during the first quarter of 2019.

The company on May 7 reported earnings of $1.92 per share, topping the normalized estimate of $1.69 per share by 13.6%. "Our earnings performance this quarter reflects our strategic focus, improved capital investments and commitment to a high-performance culture, as we work to achieve our mission to be North America's premier energy infrastructure company," said Sempra Chairman and CEO Jeffrey Martin in a May 7 statement.

At the time of its earnings release, Sempra was days away from producing liquefied natural gas from the first train of the Cameron LNG export terminal in Louisiana. The company announced on May 31 that Cameron LNG, which is expected to become one of the company's strongest cash flow generators, shipped its first commissioning cargo.

"We see an earnings boost in '19 and '20 from the ramp up of [Sempra]'s new LNG export facilities," CFRA analyst Christopher Muir said in a May 7 research note. The firm maintained its "buy" opinion on the company's shares.

Sempra executives are also optimistic that the California Legislature would consider a funding mechanism to share the cost burden of catastrophic wildfires in the state. On May 30, the state Public Utilities Commission approved legislatively mandated wildfire mitigation plans for investor-owned utilities. However, the plans do not constitute approval for recovery associated with the actions outlined in the plans.

A state-appointed panel on wildfire costs also recommended changes to the state's inverse condemnation doctrine, which holds utilities strictly liable for damages related to wildfire. Lawmakers are looking to the recommendations of the Commission on Catastrophic Wildfire Cost and Recovery.

For another California company, the recent wildfires have taken a bite out of its profits. Edison International on April 30 reported earnings of 63 cents per share, missing the consensus earnings estimate of 89 cents per share by 29.2%.

"We remain focused on mitigating increased wildfire risk and its related financial impacts on our communities and the health of the state's electric utilities," said Edison International President and CEO Pedro Pizarro.

Bankrupt California utility PG&E Corp., which is not included in the chart, managed to beat the consensus estimate of 88 cents per share by 16 cents.

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Among other companies that beat analyst expectations in the quarter were Ameren Corp. and NextEra Energy Inc.

Ameren recorded higher first-quarter earnings of 78 cents per share, compared to an estimate of 69 cents per share. The company said the higher earnings reflect the benefits of its increased infrastructure investments.

NextEra Energy booked earnings of $2.20 per share, beating the S&P Global Market Intelligence consensus normalized estimate of $2.04 per share. "We see strong cash distributions from NextEra Energy Partners adding to cash flows, allowing [NextEra Energy] to achieve dividend growth of 12% to 14% through 2020," Muir said in an April 23 research note.

On the other end, Entergy Corp. and PPL Corp. were among the companies that came up short of analyst expectations in the first quarter of 2019.

Entergy reported first-quarter adjusted earnings of 82 cents per share, missing the consensus estimate of 88 cents per share by 6.8%. "While weather was a headwind, we remain firmly on track to achieve our full-year financial guidance, as well as our longer-term outlooks," said Chairman and CEO Leo Denault in a May 1 statement. The company targets adjusted earnings in the range of $5.10 per share to $5.50 per share in 2019.

PPL posted earnings from ongoing operations of 70 cents per share, compared to the consensus estimate of 73 cents per share. The company cited lower earnings at its U.S. segments for the decrease in its earnings in the most recent quarter.

Companies that booked earnings in line with analyst estimates were Exelon Corp., Fortis Inc. and Xcel Energy Inc.