SCANA (SCG) Beats on Q2 Earnings, Revenues Decline Y/Y

Energy holding company SCANA Corp. SCG reported second-quarter 2016 earnings of 74 cents per share that beat the Zacks Consensus Estimate by a penny and improved from the year-ago figure of 69 cents.

The company's quarterly operating revenues decreased to $905 million from $967 million in the year-ago period.

Segment Performance

South Carolina Electric & Gas Company (SCE&G): Quarterly earnings from this segment, SCANA's principal subsidiary, were 79 cents per share, up from 77 cents in the year-ago quarter.

PSNC Energy: This segment posted a breakeven like it did in the prior-year quarter.

SCANA Energy-Georgia: The segment – comprising SCANA's retail natural gas marketing business in Georgia – also posted a breakeven. It had incurred a loss of 2 cents in second-quarter 2015.

Guidance

SCANA reaffirmed its 2016 earnings guidance of $3.90–$4.10 per share. The company targets an average annual growth rate of 4–6% over the next three to five years.

SCANA CORP Price, Consensus and EPS Surprise

SCANA CORP Price, Consensus and EPS Surprise | SCANA CORP Quote

Our Expectation

Going forward, we expect SCANA to benefit from the new electricity generation plants within its service territory and nuclear expansion projects. The company is a stable, relatively strong and regulated integrated electric utility, supported by favorable regional demographics and electric utility rate.

However, we are apprehensive of the company's sensitivity to changes in coal, gas, oil and other commodity prices. Construction costs and delays could affect the timing of rate base growth, earnings, cash flow and balance sheet quality.

Currently, SCANA carries a Zacks Rank #4 (Sell). Some better-ranked players from the broader energy sector are Sasol Ltd SSL, Dril-Quip, Inc. DRQ and Murphy USA Inc MUSA. Each of these stocks sports a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>