Duke Energy Corp.
) reported adjusted second quarter 2014 earnings of $1.11 per share
that came in ahead of the Zacks Consensus Estimate of $1.00 by 11%.
Quarterly earnings also increased 27.6% from the year-ago figure of
Duke Energy Corporation - Earnings Surprise |
The strong numbers were fired by its Regulated Utilities and
International Energy segments. The upside resulted from favorable
weather and a lower effective tax rate. A tax benefit resulting
from the reorganization of the company's operations in Chile was an
During the quarter under review, Duke Energy's revenues increased
7.4% year over year to $5,283.0 million. The reported figure,
however, failed to meet the Zacks Consensus Estimate of $6,106.0
million by 13.5%.
On the cost front, total operating expenses were $4,839 million in
the quarter, down 4.3% from $5,059 million in the year-ago period.
The costs comprised regulated input costs (up 7.7%), non-regulated
input costs (down 2.5%), natural gas cost (flat year over year),
operation & maintenance cost (up 2.5%) and depreciation and
amortization expense (up 12.2%).
Operating income improved 35.9% year over year to $1,116 million.
Quarterly Segmental Highlights
Regulated Utilities (formerly known as U.S. Franchised Electric and
Gas): Adjusted income was $689.0 million, up from $590.0 million a
year ago. This was driven by higher pricing and riders, favorable
weather, a lower effective tax rate, lower operating and
maintenance expenses and increased wholesale net margins.
International Energy: Segment income advanced to $146.0 million
from $87.0 million buoyed by robust results in Latin America, in
particular higher volumes and pricing in Brazil and positive
results at National Methanol Company. The positives were partly
offset by unfavorable foreign currency exchange rates.
Commercial Power: The segment recorded an operating income of $16.0
million in the quarter as against a $3.0 million loss in the
year-ago period. The improved results reflect higher earnings from
the renewable business and from the Midwest coal and gas generation
Other: The segment includes corporate interest expense not
allocated to the other business units, results from Duke Energy's
captive insurance company, other investments, and income tax
Net expenses were $65.0 million, up from $57.0 million in the
As of Jun 30, 2014, the company held cash & cash equivalents of
$2,008 million versus $1,501.0 million as of Dec 31, 2013.
Long-term debt increased to $40,593.0 million (including current
maturities) from $40,256.0 million as of Dec 31, 2013. The
debt-to-capitalization ratio stood at 49.8% in the quarter.
Duke Energy boosted its full year 2014 adjusted earnings guidance
range to $4.50-$4.65 per share from its previous forecast of
$4.45-$4.60 per share. It had earlier pegged its longer-term
average annual growth at 4% to 6% through 2016.
At the Peers
Edison International (
) reported solid second quarter 2014 results with adjusted earnings
of $1.08 per share well ahead of the Zacks Consensus Estimate of 83
cents by 30.1%. Earnings for the quarter also increased 36.7% from
the year-ago figure of 79 cents per share.
Entergy Corp. (
) posted second quarter 2014 operational earnings of $1.11 per
share, higher than the year-ago number of $1.01 per share by 9.9%.
However, earnings failed to surpass the Zacks Consensus Estimate of
$1.14. Quarterly earnings increased on the back of strong
performance from its Utility and Entergy Wholesale Commodities
American Electric Power Company Inc. (
) reported second quarter 2014 operating earnings of 80 cents per
share, beating the Zacks Consensus Estimate of 75 cents by 6.7%.
The quarterly figure also improved 9.6% from the year-ago adjusted
profit of 73 cents per share. The upbeat performance was supported
by investments in infrastructure and transmission as well as system
The largest power provider in the U.S. - Duke Energy - reported
higher quarterly earnings, aided by positive contributions from
across the board. We believe the company's regulated electricity
and gas operations will enable it to generate a relatively steady
and growing earnings stream in the future.
Duke remains focused on selling off its Midwest commercial
generation business, which includes ownership interests in 11 power
plants. The company's willingness to get out of the wholesale
power-generation business in the Midwest will reduce volatility in
its financial results.
Going forward, key growth drivers for the company include its
strong balance sheet, ongoing capital expansion projects and an
above industry average dividend yield. However, the unfavorable
macro backdrop, predominantly fossil-fuel based generation assets
and tepid demand for electricity remain matters of concern. Duke
Energy presently holds a short-term Zacks Rank #3 (Hold).
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