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Why Is Eversource (ES) Down 4.3% Since its Last Earnings Report?

It has been about a month since the last earnings report for Eversource EnergyES . Shares have lost about 4.3% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is ES due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Eversource Q1 Earnings Meet Estimates, Revenues Rise

Eversource Energy reported first-quarter 2018 operating earnings of 85 cents per share, in line with the Zacks Consensus Estimate. Earnings improved 3.7% year over year.

Total Revenues

Eversource's first-quarter revenues of $2,288 million surpassed the Zacks Consensus Estimate of $2,106 million by 8.6% and improved 8.7% from the year-ago figure of $2,105 million.

Highlights of the Release

In the reported quarter, natural gas distribution increased 4.9% to 43,179 million cubic feet of gas.

Operating expenses increased nearly 15% year over year to $1,845.4 million, primarily owing to higher expenses from purchased power, fuel and transmission and depreciation expenses.

Operating income was down 11.7% to $442.5 million and interest expenses were up 17.1% year over year at $121.1 million.

Net income in the reported quarter was $271.4 million, up 3.9% from the year-ago quarter.

Segmental Performance

Electric Distribution: This segment's earnings declined 8.7% year over year to $104.2 million. The decline was primarily on account of sale of generation assets, higher depreciation, property tax, operations and maintenance expense, which was partially offset by higher electric distribution margins.

Electric Transmission: The segment's earnings were up 14% to $107.4 million. Higher transmission earnings were primarily due to Eversource's additional investment in its electric transmission system.

Natural Gas Distribution: The segment's earnings improved 13.8% to $57.8 million. The year-over-year increase was primarily due to strong sales, partially offset by higher operation and maintenance expenses.

Water Distribution: Eversource's water distribution segment, which was created after it acquired Aquarion Water Company in December 2017, earned $1.5 million in the first quarter of 2018.

Eversource Parent & Other Companies: The segment incurred a loss of $1.4 million against the year-ago quarter's earnings of $0.4 million.

Guidance

Eversource reaffirmed 2018 earnings guidance in the range of $3.20-$3.30. Long-term earnings growth is projected in the range of 5-7% for the long term.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.

Eversource Energy Price and Consensus

Eversource Energy Price and Consensus | Eversource Energy Quote

VGM Scores

At this time, ES has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, ES has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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