Con Edison Falls Behind Consensus - Analyst Blog

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Consolidated Edison Inc. 's ( ED ) first-quarter 2012 earnings from continuing operations came in at $1.01, below the Zacks Consensus Estimate of $1.04. This follows in the footsteps of the year-ago quarter when earnings also underperformed the market expectations. However, results compared favorably with earnings from continuing operations of 99 cents in the year-ago quarter.

On a reported basis, the company reported earnings of 95 cents per share compared with $1.07 in the year-ago quarter. Earnings were lower year-over-year due to changes in the rate plans of utility subsidiaries and the effects of the milder winter weather on steam revenues.

The GAAP EPS variation of 12 cents year-over-year was primarily due to higher mark-to-market losses in the Competitive Energy businesses.

In the reported quarter Con Edison of New York (CECONY) benefited by 12 cents per share as higher rates authorized higher recovery of costs and 2 cents from other items. This was partially offset by 10 cents from higher operations and maintenance expense, and 3 cents from higher depreciation. The upshot was a penny upside year over year.

The Orange and Rockland utilities' EPS was flat year-over-year. In the Competitive Energy businesses owing to higher mark-to-market losses, EPS fell by 13 cents while the parent company reported flat numbers year-over-year.

Operational Results

Consolidated Edison reported operating revenue of $3.1 billion, a decrease of $271 million over the year-ago quarter and $412 million lower than the Zacks Consensus Estimate. Of this Electric revenues were flat at $1.9 billion. However Gas revenues fell $110 million to $645 million; Steam revenues fell $62 million to $263 million; and Non-utility revenues fell $92 million to $308 million.

Consolidated Edison's earnings from ongoing operations were $295 million compared with $289 million in the year-ago quarter. Its net income was $277 million compared with $311 million in the year-ago quarter.

Outlook

Consolidated Edison expects its EPS from ongoing operations for fiscal 2012 in the range of $3.65 - $3.85.

New York City-based Consolidated Edison is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. Consolidated Edison's regulated businesses operate through two subsidiaries - Consolidated Edison Company of New York (CECONY) and Orange and Rockland Utilities (O&R). 

Consolidated Edison of New York is a regulated utility in New York City and Westchester County. O&R serves electric and gas customers in southeastern New York State, northern New Jersey, and northeastern Pennsylvania. Consolidated Edison's unregulated businesses operate through three subsidiaries - Consolidated Edison Development (engaged in infrastructure development), Consolidated Edison Energy (supplies energy in the wholesale market) and Consolidated Edison Solutions (provides retail energy).

Consolidated Edison is a predominantly regulated utility with multi-year rate plans for its services. However the stock is currently trading at a premium per the current fiscal earnings estimates vis-à-vis its peers like American Electric Power Company Inc. ( AEP ) and Edison International ( EIX ). Consolidated Edison currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AEP , ED , EIX

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