SCANA Misses EPS, Rev Est - Analyst Blog

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Natural gas and electric company SCANA Corporation ( SCG ) has reported fourth quarter 2011 earnings of 76 cents per share, up 2.7% compared to the prior year quarter. However, it failed to meet the Zacks Consensus Estimate of 79 cents.

For full year 2011, SCANA has reported earnings of $3.01 per share compared to $2.99 per share in prior year but failed to meet the Zacks Consensus Estimate of $3.04.

 

Operating revenue of $1,036.0 million declined by 9.6% from the year-ago level of $1,146 million and came in below the Zacks Consensus Estimate of $1,188 million.

 

In 2011, operating revenue decreased by 4.2% from the year-ago level of $4,601 million to reach $4,409 million. Operating revenue fell below the Zacks Consensus Estimate of $4,557 million.

 

Segment Performance

 

South Carolina Electric & Gas Company ( SCE&G ): Earnings from the segment, which is also SCANA's principal subsidiary, went up to $2.46 per share in 2011 from $2.42 for full year 2010. The growth was mainly driven by higher margins due to increases in base rate under the Base Load Review Act, partially offset by higher interest, property taxes and depreciation expense as well as share dilution.

 

As of December 31, 2011 natural gas and electric customers of SCE&G inched up 1.1% and 0.5%, respectively, on an annualized basis.

 

PSNC Energy : The segment registered earnings of 37 cents per share for full year 2011, inching past the earnings in the prior-year period by a penny. At year end, PSNC Energy's customer base increased 1.1% year over year.

 

SCANA Energy - Georgia : The segment, which houses SCANA's retail natural gas marketing business in Georgia, reported earnings of 19 cents per share, compared with the earnings of 24 cents achieved a year ago. The downtick can be attributed to lower throughput due to milder than normal weather. At December 31, 2011 SCANA Energy's customer base was approximately 455,000.

 

Balance Sheet

 

As of December 31, 2011, SCANA had $4,653 million in long-term debt (inclusive of current portion).

 

Guidance

 

SCANA has maintained its full-year 2012 earnings guidance in the range of approximately $3.05-$3.25 per share, with an internal aim of $3.17 per share.

 

Our Recommendation

 

We believe SCANA is a relatively strong and regulated integrated electric utility, supported by favorable regional demographics and electric utility rate. Given the Base Load Review Act rate recovery as well as some normal utility growth, we believe that the company can achieve its earnings target. Again, the company remains committed to nuclear construction, cost control, apart from providing safe, reliable energy for the balance of the year.

 

However, we remain concerned because of SCANA's heavy debt level. The company also faces tough competition from Duke Energy Corporation ( DUK ) and Progress Energy Inc . ( PGN ).

 

Hence, we retain our long-term Neutral recommendation for SCANA. The company holds a Zacks #2 Rank, which is equivalent to a short-term Buy rating.


 
DUKE ENERGY CP ( DUK ): Free Stock Analysis Report
 
PROGRESS ENERGY ( PGN ): Free Stock Analysis Report
 
SCANA CORP ( SCG ): Free Stock Analysis Report
 
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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: DUK , PGN , SCG

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