Wisconsin Energy Beats Estimates - Analyst Blog

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Energy utility, Wisconsin Energy Corporation ( WEC ) posted net operating earnings of 49 cents per share in the fourth quarter of 2011, ahead of the Zacks Consensus Estimate of 47 cents per share. However, the results fell short of the year-ago quarter's operating earnings by 4 cents per share.

Wisconsin Energy's fiscal year 2011 operating earnings were $2.18 per share compared with $1.92 per share reported in 2010. The results exceeded the Zacks Consensus Estimate by 3 cents.

Earnings growth was driven by the positive contribution from the company's Power the Future plan. Commercial operation of the new second unit at the Oak Creek site, from January 2011, contributed to the upsurge in results.

Earnings on a GAAP basis, for 2011 were $2.24 per share versus $1.93 per share recorded in 2010. The 6 cent difference between operating and GAAP earnings, for 2011, emanated from discontinued operations.

Total Revenue

Wisconsin Energy's total revenue in fourth-quarter 2011 was $1,113.2 million, compared with $1,089.8 million in the year-ago period, reflecting a growth of 2.1%.

Reported quarter revenue marginally surpassed the Zacks Consensus Estimate of $1,101 million.

Wisconsin Energy's total revenue for 2011 upped 2.2% to $4,486.4 million from $4,202.5 million reported in the prior fiscal year.

Fiscal year 2011 revenue of the company was higher than the Zacks Consensus Estimate of $4,435 million.

Operational Update

Total operating expenses during the quarter decreased marginally by 0.05% during the fourth quarter 2011, while for the fiscal year cost declined by 0.24% year over year. This resulted mainly from a decline in the cost of goods sold.

For the fiscal year, operating expenses, as a percentage of total revenue, declined by 521 basis points year over year, thus benefiting the operating results of the company.

The growth in revenue and the decline in costs drove fiscal operating income by 9.49% to $887.3 million from $810.4 million in 2010.

Net interest expenses in 2011 were $235.8 million versus $206.4 million in 2010, up 14.2%. The incremental interest expenses can be attributed to a higher debt burden from the previous financial year.

Financials

Cash and cash equivalent at Wisconsin Energy as of December 31, 2011 were $14.1 million.

Cash from operating activities for 2011 was $993.4 million versus $810.4 million in 2010.

Capital expenditure during the year was $830.8 million, which reflected a growth of $32.6 million from $798.2 million incurred in 2010.

Long-term debt rose to $3,963.3 million from the prior-year level of $3,802.1 million, as of December 31, 2010.

Dividend

The company has been consistently paying dividends to shareholders. On January 2012, the company announced a quarterly dividend of 30 cents, which reflects an increase of 4 cents from the prior quarterly rate. This hiked quarterly dividend will be paid on March 1, 2012, to shareholders of record as on February 14, 2012.

The new annualized dividend rate will be $1.20 per share reflecting a growth of 15.4% from the previous annualized rate of $1.04 per share.

Peer Update

Xcel Energy Inc . ( XEL ), competing with Wisconsin Energy, announced operating earnings for the fourth quarter 2011 of 29 cents per share, flat year over year. The results of the company missed the Zacks Consensus Estimate by a penny.

Xcel's operating earnings for 2011 were $1.72 per share compared with $1.62 per share reported in 2010. The results also surpassed the Zacks Consensus Estimate by 3 cents.

Our Take

Not only did the company surpass our expectation, the rise in consumption of electricity by large commercial and industrial customers are positive signs for the company. Yet, an inkling of doubt remains with the decline in Utility Gas revenue in both the quarter and the fiscal year.

Wisconsin Energy currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. 

Based in Milwaukee, Wisconsin, Wisconsin Energy, through its subsidiaries, generates and distributes electricity in Southeastern, East Central, and Northern Wisconsin, as well as in the Upper Peninsula of Michigan. The company also distributes natural gas.


 
WISC ENERGY CP ( WEC ): Free Stock Analysis Report
 
XCEL ENERGY INC ( XEL ): 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: WEC , XEL

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