Earnings Preview: Edison Intl. - Analyst Blog
October 24 2011 - 11:15AM
Zacks
EdisonInternational (EIX), a
generator and distributor of electric power and an investor in
infrastructure and energy assets, is scheduled to report
third-quarter 2011 financial results on Wednesday, November 2,
2011. The current Zacks Consensus Estimate for the quarter is $1.27
a share. For the quarter under review, revenue is projected at $4.4
billion, according to the Zacks Consensus Estimate.
Second-Quarter 2011, a Synopsis
Edison International’s earnings of 54 cents a share had beaten
the Zacks Consensus Estimate of 49 cents. However, earnings came in
below the year-ago quarterly earnings of 62 cents per share. The
results reflect rate base growth at Southern California Edison
(‘’SCE’’) that was more than offset by the tax benefits in the
prior-year period due to a change in tax accounting. On a reported
basis, including one-time items, earnings came in at 54 cents a
share, compared with $1.05 earned in the year-ago quarter.
Edison International’s revenue was $2.98 billion, beating the
Zacks Consensus Estimate by $78 million. The top line was also
ahead of the prior-year figure of $2.74 billion. In the reported
quarter, Electric Utility revenues increased 8.9% year over year to
approximately $2.45 billion, while Competitive power generation
revenues rose 8.7% to $538 million. Operating income in the
reported quarter was $380 million compared with $351 million in the
prior-year period.
Fiscal 2011 Guidance
Management expects earnings in the range of $2.60 to $2.90 per
share for 2011. Including non-core items of $0.01, GAAP earnings
are expected to be in the range of $2.59 to $2.89 in 2011.
Third-Quarter 2011 Consensus
Analysts considered by Zacks expect Edison International to post
third-quarter 2011 earnings of $1.27 a share, reflecting a decline
of 13% from the year-ago quarter. The current Zacks Consensus
Estimates for the quarter range from a low of $1.20 to a high of
$1.35.
Zacks Agreement & Magnitude
Of the 9 analysts following the stock, 1analyst each has revised
upward and downward the estimate in the last 7 days. The downward
revision cast a material impact on the Zacks Consensus Estimate,
which fell to $1.27 from $1.32.
Mixed Earnings Surprise History
With respect to earnings surprises, Edison International has
topped as well as missed the Zacks Consensus Estimate over the last
four quarters in the range of negative 4.92% to positive 23.73%.
The average remained at 8.23%. This suggests that Edison
International has beaten the Zacks Consensus Estimate by an average
of 8.23% in the trailing four quarters.
Conclusion
Based in Rosemead, California, Edison International engages in
the supply of electric energy in central, coastal and southern
California. The company operates through its two principal
subsidiaries: Southern California Edison Company (“SCE”), and
Edison Mission Group (“EMG”).
Southern California Edison is a public utility providing
electricity primarily to central, coastal, and southern California
(excluding Los Angeles). It also has a presence in Nevada and
Arizona.
Edison Mission Group is a holding company with subsidiaries
engaged in the business of developing, acquiring, owning or
leasing, operating and selling energy and capacity from independent
power production facilities. It also engages in hedging and energy
trading activities in competitive power markets
With its strong portfolio of regulated utility assets and
well-managed merchant energy operations, Edison International
presents a lower risk profile compared to its utility-only peers.
Our modestly bullish outlook for the company is supported by the
consistent performance of its stable utility operations,
California's supportive regulatory environment, ongoing alternative
energy projects, steep growth in rate base and a relatively cheap
earnings-based valuation. However, several factors continue to
weigh on Edison International, including a tepid economy, volatile
gas prices, imminent expiry of its cheap rail transport contract
and the recovery of capital expansion costs.
The company expects fiscal 2011 to witness strong earnings
growth at SCE’s regulated utility assets wind business, and lower
income taxes. This however would be tempered by EMG’s merchant
energy operations which faces weak power market fundamentals.
Edison International currently retains a Zacks #3 Rank
(short-term Hold rating). We maintain our long-term Neutral rating
on the stock. The near-term cautious stance is shared by its peers
like American Electric Power Company Inc. (AEP)
and Ameren Corporation (AEE).
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