Electricity and natural gas company
Xcel Energy Inc.
) operating earnings for the third quarter 2012 of 78 cents per
share were up 9 cents from the year-ago quarter and 6 cents
higher than the Zacks Consensus Estimate.
AMER ELEC PWR (AEP): Free Stock Analysis
XCEL ENERGY INC (XEL): Free Stock Analysis
To read this article on Zacks.com click here.
Earnings during the said quarter benefited from higher electric
and gas margins due to different rate hikes becoming effective
from 2012. The results were partially offset by higher property
taxes and interest expenses.
Xcel Energy's GAAP earnings for the reported quarter were 81
cents per share versus 69 cents per share recorded in the
year-ago quarter. The three cent difference between operating and
GAAP earnings in the reported quarter was due to a three cent
gain from a tax benefit associated with federal subsidies for
prescription drug plans.
Xcel Energy clocked total revenue of $2.72 billion in the
reported quarter, down 3.9% from $2.83 billion in the year-ago
period. The year-over-year decline was due to lower contributions
from the Natural Gas and Electric segments.
Reported quarter revenue was also lower than the Zacks Consensus
Estimate of $3.01 billion.
: Revenue from this segment declined 3.3% year over year to $2.53
billion from $2.62 billion in the year-ago period.
Sales at this segment were largely impacted by the fluctuation in
the price of natural gas, coal and uranium used in the generation
of electricity. However, the fuel recovery mechanism, which
allows the company to recover current expenses, came in handy; or
else revenues and margins would have been widely affected by
volatile input costs.
: Revenue at this segment decreased 10.5% to $174.5 million from
$194.9 million in the year-ago period.
: Segment revenue in the reported quarter was $17.1 million
versus $17.2 million in the year-ago period, reflecting a nominal
decline of 0.6%.
Total operating expenses declined 8% to $2 billion from $2.18
billion in the year-ago quarter. Higher expenses were mainly due
to a 12.5% decline in electric power and purchased power
expenses. The cost of natural gas sold and transported also
dipped from the year-earlier period.
Operating expenses, as a percentage of total revenue, decreased
343 basis points year over year, which positively impacted the
operating results of the company. Operating income accordingly
increased 10.6% year over year to $720.4 million from $651.5
million reported in the year-ago period.
Total interest charges at the end of the third quarter 2012 rose
3.9% to $153.7 million from $148.01 million at the end of the
third quarter 2011. Expenses rose on account of higher long-term
debt levels to fund investment in utility operations, partially
mitigated by lower interest rates.
Long-term debts of the company as of September 30, 2012 were
$10.1 billion while the debt-to-capital ratio at the end of the
quarter was 56%.
Excel Energy from time to time issues debt and equity to
refinance debts, fund operations and for other general corporate
purposes. During the third quarter of 2012 the company issued
four series of bonds aggregating $1.6 billion, which were
utilized for varied purposes.
In October, the company issued $100 million of 30-year first
mortgage bonds with a coupon of 3.70% to meet its financial
Xcel Energy reaffirmed its earnings guidance for 2012 in the
range of $1.75-$1.85 per share. The guidance assumes normal
weather pattern for the remainder of 2012. The company guides
weather-adjusted retail electric utility sales to likely remain
flat in 2012, while weather-adjusted retail firm natural gas
sales are expected to decline 1% from 2011 levels.
The company expects GAAP earnings per share for 2012 in the upper
range of $1.75 to $1.85.
In 2012, operating and maintenance expenses of the company are
estimated to increase 2% year over year. Depreciation expense is
projected to increase in a range of $40 million to $45 million
from 2011 levels.
Interest expenses are forecast to go up in the range of $0 to $15
million, while the effective tax rate of the company is expected
to be in the range of 34% to 35% in 2012.
The company expects its 2013 ongoing earnings per share to be
between $1.85 and $1.95.
American Electric Power Co. Inc
), competing with Xcel Energy, reported earnings of $1.02 per
share in the third quarter 2012, below the year-ago figure of
$1.07, but at par with the Zacks Consensus Estimate.
The company reported net revenue of $4.15 billion in the third
quarter, below the Zacks Consensus Estimate and the year-ago
revenue of $4.33 billion.
The company surpassed our expectation for three straight quarters
in 2012. The earnings beat to some extent was aided by favorable
electricity and gas rates. The cost control measures and warm
weather conditions in its service territories also boosted the
We believe the company will match its performance of the first
nine months in the last three months of 2012 and will meet its
earnings guidance per share for the year.
Xcel Energy currently retains a short term Zacks # 3 Rank (Hold
Based in Minneapolis, Minnesota, Xcel Energy is a U.S.
electricity and natural gas company, with operations in eight
Western and Midwestern states. With a market capitalization of
$13.48 billion, the company has 11,312 full time employees.