Con Edison Beats on Earnings & Revs - Analyst Blog

Consolidated Edison Inc. ED posted first quarter 2014 earnings from ongoing operations of $1.17 per share, beating the Zacks Consensus Estimate of $1.06 by 10.4%. The earnings beat came on the back of changes in the rate plans of Con Edison's utility subsidiaries and a much colder-than-normal winter. The quarterly result also increased 8.3% from the year-ago figure of $1.08 per share.

Including the effects of its lease in/lease out transactions and the net mark-to-market effects of the competitive energy businesses (CEBs), the company registered earnings of $1.23 per share compared with 66 cents in the year-ago quarter.

Quarterly Operational Results

Consolidated Edison reported revenues of $3,789.0 million, up 19.0% year over year. The top line also surpassed the Zacks Consensus Estimate of $3,519.0 million by 7.7%. The results reflect higher electric, steam, gas as well as non-utility sales.

The company's largest top-line generator, Electric revenues were up 14.2% year over year. Gas revenues, Non-utility and steam revenues also increased 18.9%, 116.4% and 2.7%, respectively.

Total operating expenses were up 16.8% year over year to $3,104.0 million. Purchased power expenses increased 36.2%, fuel cost was up 6.1% and gas purchased for resale cost increased 60.0%. Depreciation and amortization expenses increased 4.0% year over year.

Guidance

For this year, ConEd's earnings from ongoing operations are expected between $3.65 and $3.85 per share. The company expects to spend around $2,608 million for the year, the majority of which will be spent at its regulated utilities.

Financials

Cash at the end of Mar 31, 2014 was $102 million versus $674 million at the end of Dec 31, 2013. Long-term debt was $11.3 billion as of Mar 31, 2014 versus $10.5 billion at 2013 end.

Peer Reviews

American Electric Power Company Inc. AEP reported first quarter 2014 operating earnings of $1.15 per share, beating the Zacks Consensus Estimate of 91 cents by 26.4%. The quarterly figure also improved a whopping 43.8% from the year-ago adjusted profit of 80 cents per share. The upbeat performance was supported by favorable weather and high power prices.

CMS Energy Corp. CMS posted first-quarter 2014 earnings per share of 75 cents, surpassing the Zacks Consensus Estimate of 64 cents by 17.2%.

Entergy Corp. ETR reported first-quarter 2014 earnings of $2.29 per share, beating the Zacks Consensus Estimate by 8.5%.

Our Take

Consolidated Edison succeeded in beating the Zacks Consensus Estimate on both the top and bottom line. The company is focused on energy efficiency initiatives while its aggressive oil-to-gas conversion program will lower costs and improve air quality. Also, the company continues to invest heavily in infrastructure improvement.

Consolidated Edison currently has a Zacks Rank #3 (Hold).