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PNM Resources Reaffirms 2020 Earnings Guidance Amid Coronavirus

PNM Resources, Inc. Holding Co. PNM recently reiterated its 2020 earnings outlook within $2.16-$2.26 per share, mainly targeting the midpoint of the guided range. This expectation is backed by higher-than-normal temperatures across New Mexico and Texas, which offset the second- quarter’s decline in demand from the commercial customer group due to lockdown. The Zacks Consensus Estimate for 2020 earnings is currently pegged at $2.16 per share, which has moved 0.5% north in the past 60 days.

Impact on Revenue Sources

Notably, 39.1% and 36.3% of the PNM Resources’revenues for the year 2019 came from residential and commercial customers, respectively.

Particularly, for second-quarter 2020, demand from residential customers increased due to the warmer summer weather and ramped-up work from home directives for controlling the spread of novel coronavirus. Also, PNM Resources’ effective cost- management efforts are likely to have aided its earnings.

Moreover, the company is likely to have benefited from lower interest rate. PNM Resources issued $200 million Senior Unsecured Notes in April at a weighted rate of 3.3%, on average. The proceeds from this were used to repay other debt obligations.

Although the coronavirus has a positive effect on the company’s residential demand, the same is adversely impacting commercial demand.

Comparison Y/Y

The second-quarter 2019 earnings accounted for 17.1% of the full year’s earnings while in 2020, the company’s second-quarter bottom line is expected to contribute to 22% of the full-year earnings. This hike can be mainly attributed to the above-mentioned favorable factors.

Historically, the second half of the year contributes to a major portion of the company’s earnings. Nearly, 72.7% of the same was generated in the June quarter of last year while in the comparable period of the current year, the contribution is projected to be a little down at nearly 70%.

Price Performance

Currently, the stock carries a Zacks Rank #2 (Buy). In the past month, shares of the company have slid 0.3% compared with the industry’s decline of 5.5%.


 

Other Stocks to Consider

A few other top-ranked stocks from the same space are Fortis Inc. FTS, DTE Energy Company DTE and Korea Electric Power Corporation KEP, each carrying the same Zacks Rank as PNM Resources at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Fortis’ 2020 earnings has moved 1.04% north over the past 60 days. It has a trailing four-quarter positive earnings surprise of 6.28%, on average.

The long-term earnings growth rate for DTE Energy is pegged at 5.53%. The Zacks Consensus Estimate for 2020 earnings has moved 0.31% up over the past 60 days.

Korea Electric Power’s long-term earnings growth rate stands at 5%. The Zacks Consensus Estimate for 2020 earnings has moved 27.78% up over the past 60 days.

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