It has been about a month since the last earnings report for Duke Energy (DUK). Shares have lost about 7.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Duke Energy 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.
Duke Energy Q1 Earnings Miss Estimates, Revenues Rise Y/Y
Duke Energy reported first-quarter 2023 adjusted earnings of $1.20 per share, which lagged the Zacks Consensus Estimate of $1.28 by 6.3%. The bottom line also declined 6.9% year over year.
Including one-time adjustments, the company reported a GAAP loss of $1.01 per share compared to the year-ago quarter’s earnings of $1.08 per share.
Total operating revenues came in at $7,276 million, which improved 3.8% from $7,011 million in the year-ago period. The reported top line also surpassed the Zacks Consensus Estimate of $7,197 million by 1.1%.
The Regulated electric unit’s operating revenues were $6,324 million (up 6.6% year over year), contributing 86.9% to the quarter’s total revenues. Revenues from the Regulated natural gas business totaled $882 million, down 11.9% year over year.
The Non-regulated Electric and Other segment generated revenues of $70 million, which dropped 7.9% year over year.
Highlights of the Release
Duke Energy’s total operating expenses amounted to $5,609 million in the reported quarter, down 1.6% year over year. The decrease was largely driven by lower operation, maintenance and other expenses.
The operating income improved 27.4% to $1,674 million from $1,314 million recorded in the year-ago quarter.
Interest expenses rose to $720 million from $569 million recorded in the first quarter of 2022.
For the reported quarter, the average number of customers in its Electric Utilities increased 1.5% year over year. Total electric sales volumes for the reported quarter went down 9.5% year over year to 58,246 gigawatt-hours.
Electric Utilities & Infrastructure:This segment’s earnings for the first quarter totaled $791 million, down from $896 million in the first quarter of 2022.
Gas Utilities & Infrastructure:Earnings generated from this segment totaled $287 million compared with $254 million in the year-ago period.
Other:The segment includes corporate interest expenses not allocated to other business units, resulting from Duke Energy’s captive insurance company and other investments.
This segment incurred an adjusted loss of $168 million compared with a loss of $171 million in the year-ago quarter.
As of Mar 31, 2023, Duke Energy had cash & cash equivalents of $451 million, up from $409 million on Dec 31, 2022.
As of Mar 31, 2023, the long-term debt was $69.11 billion compared with $65.87 billion on Dec 31, 2022.
During the three months ended Mar 31, 2023, the company generated net cash from operating activities of $1,483 million compared with $1,798 billion in the same period last year.
Duke Energy reaffirmed its 2023 adjusted EPS guidance. The company still expects to generate adjusted EPS in the range of $5.55-$5.75. The Zacks Consensus Estimate for 2023 earnings, pegged at $5.62 per share, is lower than the midpoint of the company’s projected range.
DUK now projects long-term EPS growth expectation in the range of 5-7% through 2027.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
At this time, Duke Energy has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Duke Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Duke Energy is part of the Zacks Utility - Electric Power industry. Over the past month, NRG Energy (NRG), a stock from the same industry, has gained 6%. The company reported its results for the quarter ended March 2023 more than a month ago.
NRG reported revenues of $7.72 billion in the last reported quarter, representing a year-over-year change of -2.2%. EPS of $0.86 for the same period compares with $0.25 a year ago.
NRG is expected to post earnings of $1.34 per share for the current quarter, representing a year-over-year change of +306.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -13.9%.
NRG has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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