Xcel Energy Inc.
), an energy holding providing natural gas, electricity and other
products and services, is slated to release its third-quarter
2012 earnings result before the market opens on October 25,
Recap, Second-Quarter 2012
Xcel Energy reported mixed overall performance in the second
quarter of 2012 posting a net adjusted income of 38 cents per
share, beating the Zacks Consensus Estimate of 35 cents per share
and year-ago earnings by 2 cents. Higher electric margin,
resulting from various rate hikes and warmer-than-normal weather
across all its service territories were responsible for the
Quarterly revenue suffered a setback as sales from the gas
distribution business plunged by 24.1% along with a 4.3% drop in
electric segment sales. Total revenue fell substantially by 6.7%
to $2.28 billion from $2.44 billion in the year-ago quarter.
Moreover, revenue was way below the Zacks Consensus Estimate of
Xcel Energy estimates earnings per share for 2012 to be on the
lower end of the guidance range of $1.75-$1.85 per share.
Operating and maintenance expenses of the company are expected to
climb by 1% year over year, while depreciation expense is
expected to increase in the range of $40 million to $50 million
from 2011 levels.
The Zacks Consensus Estimate for the third quarter 2012 is 71
cents per share, up 3.08% from 69 cents reported in the
comparable quarter, last year. At present, the Zacks Consensus
Estimate for earnings ranges from 68 cents to 75 cents per
For 2012, the Zacks Consensus Estimate is $1.78 per share,
slightly higher than its previous year-end earnings of $1.72 per
share. The current Zacks Consensus Estimate ranges between $1.75
and $1.80 per share.
Estimate Revisions Trend
For third quarter 2012, none of the 8 analysts providing
estimates have revised their estimates over the last 30 days. A
similar trend is witnessed from the 15 covering analysts for 2012
number over the last month.
The Zacks Consensus Estimate for the third quarter remained
unchanged at 71 cents in the last 7 as well as 30 days. For 2012,
the consensus estimate has also remained static at $1.78 for the
past week and month.
With respect to earnings surprises, Xcel Energy Inc. has
reported favorable bottom-line performance in the previous two
quarters of 2012 as well as in the third quarter of 2011,
surpassing the corresponding Zacks Consensus Estimates. The
fourth quarter 2011 earnings miss was however an exception. The
earnings surprise in the last four quarter ranges from (3.3%) to
8.6%. The average surprise over the last four quarter remained a
Xcel Energy has been a prominent player in the US energy
market and is a pure play, fully regulated, vertically integrated
electric and gas utilities with the potential to grow EPS 5%-7%
over the long term. The company continues to be environmentally
proactive, with its large-scale wind energy projects, its biomass
plant in the Midwest and significant investments in pipeline and
Nonetheless, regulatory obstacles, inconsistent weather
patterns and commodity price volatilities are certain generic
limitations the company needs to watch out for. In addition,
increased property tax of $24 million is expected to drag down
the company's bottom-line by roughly $0.03 per share in 2012.
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Xcel Energy operates in an competitive energy market and faces
stiff opposition from companies like
American Electric Power Co. Inc.
CenterPoint Energy, Inc.
Currently, we are maintaining a long-term 'Neutral'
recommendation on Xcel Energy Inc. The company has a Zacks #4
Rank implying a short-term Sell rating on the stock.