Wisconsin Energy Corp.
), a diversified holding company, engaged in generation and
distribution of electricity in the Wisconsin state as well as in
the upper peninsula of Michigan, is slated to release its
third-quarter 2012 earnings result before the market bell on
October 31, 2012.
Recap, Second Quarter-2012
Wisconsin Energy posted mixed results in its second quarter
2012 with pro forma income of 51 cents per share edging out
the Zacks Consensus Estimate of 44 cents per share and year-ago
earnings of 41 cents. Bottom-line growth was primarily driven by
warm summer temperatures, lower operation and maintenance costs,
as well as the company's effective share repurchase program.
Although the company reaped substantial benefits from its
ambitious "Power the Future" project, its top-line slid 4.7% to
$944.7 million from $991.7 million in the year-ago quarter.
Moreover, revenue fell short of the Zacks Consensus Estimate by
$44.3 million. Lower-than-expected sales from the large
commercial and industrial segment were responsible for the
The Zacks Consensus Estimate for the third quarter 2012 is 57
cents per share, up 3.6% from 55 cents reported in the comparable
quarter, last year. At present, the Zacks Consensus Estimate for
earnings ranges from 56 cents to 58 cents per share.
For full year 2012, the Zacks Consensus Estimate is $2.32 per
share, 6.4% higher than its prior year-end earnings of $2.18 per
share. The current Zacks Consensus Estimate is in the band
$2.25-$2.38 per share.
Estimate Revisions Trend
We see a few estimate revisions at this point. Out of a total
of 8 estimates, 1 lone estimate moved north while none was
revised downwards in the past 30 days for the third quarter. For
the quarter, no movement was observed in the past week.
A similar trend was visible for 2012 over the last month, with
1 out of the 14 estimates jumping up. The last 7 days witnessed
no revision to the estimates.
The Zacks Consensus Estimate for the third quarter remained
static in the last 7 and 30 days. For full year 2012 the
consensus estimate inched up by a penny to $3.52 from $3.51 for
the past month while it was unchanged in the past week.
With respect to earnings surprises, Wisconsin Energy has
registered favorable earnings in the all of the past four
quarters. The earnings surprise in the last four quarter ranges
from 1.4% to 16%. The average surprise over the last four quarter
remained a positive 8.5%.
Wisconsin Energy's growth accentuating projects like the
biomass plant in Northern Wisconsin and its air quality control
improvement initiative at the original Oak Creek will broaden its
renewable energy portfolio. Also, the company's recent decision
to convert the 280 megawatt (MW), coal-fired Valley Power Plant
generation unit to natural gas would sit well with its growth
initiatives. Moreover, a healthy dividend outlook and strong
repurchase program will arrest investors' confidence.
However, compliance with regulatory standards could lead to
cost escalation and continued outages as well as weather
variations are risks the company needs to watch out for.
Wisconsin Energy operates in a highly competitive energy
market and faces intense opposition from companies like
Integrys Energy Group, Inc.
Xcel Energy Inc.
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Currently, we are maintaining a long-term Neutral recommendation
on Wisconsin Energy Inc. The company has a Zacks #2 Rank implying
a short-term Buy rating on the stock.