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Edison Beats on Earnings and Rev - Analyst Blog

Posted
10/30/2013 11:10:00 AM
By: Zacks.com
Referenced Stocks:AEP;CNL;EIX;LNT;NRG

Edison International 's ( EIX ) adjusted earnings of $1.42 per share for the third quarter of 2013 were well ahead of the Zacks Consensus Estimate of $1.21 by 17.4% and the year-ago quarterly earnings of $1.00 by 42.0%.

The upside was driven by robust cost management initiatives along with favorable tax benefits.

On a reported basis, the company registered a profit of $1.34 per share, up by a considerable 131.0% from the year-ago number of 58 cents.

Operational Highlights

Edison International's third quarter revenue was $3,960.0 million, up 6.1% year over year. The top line also exceeded the Zacks Consensus Estimate of $3,432.0 million by 15.4%.

Operations and maintenance expenses were down 2.2% year over year to $971.0 million. Depreciation, decommissioning and amortization expenses decreased 1.8% to $392.0 million from the year-earlier level. Total operating expenses were $3,171.0 million, up almost 5.0% year over year.

Segment Results

Southern California Edison's (SCE) third quarter adjusted earnings boosted 31.5% to $1.46 per share from $1.11 earned in the year-ago quarter. The results were driven by the finalizing of SCE's 2012 General Rate Case and tax benefits.

Edison International parent company and other segment narrowed its quarterly loss to 4 cents per share in the reported quarter from a loss of 11 cents in the year-ago quarter. This was mainly due to lower consolidated state income taxes.

Effective Dec 17, 2012, Edison International no longer consolidates the earnings and losses of Edison Mission Energy ("EME") after the voluntary petitions filed by EME for relief under Chapter 11 of the Bankruptcy Code. EME and its subsidiaries retain control of their assets and are authorized to operate their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court.

Edison International has recorded a full impairment of the investment in EME as a result of deconsolidation, recognition of losses previously deferred in accumulated other comprehensive income, a provision for losses from the EME bankruptcy, and estimated tax impact related to the expected future tax deconsolidation and separation of EME from Edison International. Results for Edison Mission Energy are reported as non-core discontinued operations.

Recently, NRG Energy Inc. ( NRG ) inked an agreement with the bankrupt unregulated utility company EME to acquire all of its assets for a purchase price of $2.64 billion. The deal also includes purchasing Edison's equity interest in some of its subsidiaries. The transaction is expected to be concluded by the first quarter of 2014.

Financial Update

As of Sep 30, 2013, cash and cash equivalents were $610.0 million, up from $170 million as of Dec 31, 2012. Long-term debt was $9,633.0 million (including current portion), up from $9,231 million at the end of Dec 31, 2012. Net cash provided by operating activities during the first nine months of the year was $2,253.0 million versus $2,158.0 million in the year-earlier period.

Guidance

The company lifted its core earnings per share guidance to the range of $3.60-$3.70 from the previous expectation of $3.25-$3.45 for 2013. Its improved outlook reflects new assumptions about income taxes and lower operating and maintenance costs. It has also updated its basic earnings to $2.50-$2.60 from its prior target of $2.22-$2.42 per share.

Peer Results

Recently, utility company American Electric Power Company Inc. (AEP) posted third quarter 2013 operating earnings of $1.10 per share, beating the Zacks Consensus Estimate of $1.08 by 1.9%. The quarterly figure also improved 7.8% from the year-ago profit level of $1.02. This improved performance reflects positive returns from the investments made in the company's regulated operations.

Zacks Rank

Edison International presently retains a short-term Zacks Rank #4 (Sell). However, other stocks in the industry that are worth considering are Alliant Energy Corp ( LNT ) and Cleco Corp. ( CNL ), both with a comparable Zacks Rank #2 (Buy).



CLECO CORP (CNL): Free Stock Analysis Report

EDISON INTL (EIX): Free Stock Analysis Report

ALLIANT ENGY CP (LNT): Free Stock Analysis Report

NRG ENERGY INC (NRG): Free Stock Analysis Report

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