Zacks Investment Research downgraded
CPFL Energia S.A.
) to a Zacks Rank #5 (Strong sell) on Aug 16, 2013.
Why the Downgrade?
CPFL Energia's second quarter 2013 results were disappointing as
the company reported net loss of R$134 million (US$65 million)
compared with net earnings of R$246 million (US$126 million) in
the year-ago quarter. Loss per ADR came in at 11 cents, down
compared with 29 cents earnings reported in the year-ago quarter.
Shares of CPFL Energia have dropped 11.4% since the company
reported its results on Aug 14, 2013.
Revenue in local currency, for CPFL Energia increased 3.0% year
over year due primarily to higher revenue generation from
electricity sales to distributors and other operating sources.
These were however partially offset by revenue declines in
electricity sales to final customers and revenue from building
Talking of expenses and margins, cost of electric energy services
in the quarter represented 59.8% of total revenue, an increase
from 57.4% reported in the year-ago quarter. Operating margin in
the quarter was 6.2%, down 860 basis points, year over year.
CPFL Energia has a negative earnings surprise in one and
positive in three of the trailing four quarters, with an average
of -30.7%. Also, in the last 7 days, the Zacks Consensus Estimate
for the company has gone down by 5.5% to $1.20 for 2013 and has
declined 15.6% to $1.19 for 2014.
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Other Stocks to Consider
CPFL Energia is a well known electric utility in Brazil and
currently has a market capitalization of $8 billion. Other stocks
to watch out for in the industry are
Huaneng Power International, Inc.
Alliant Energy Corporation
), each with a Zacks Rank #1 (Strong Buy) while
) carries a Zacks Rank #2 (Buy).