Xcel Energy Inc. (XEL) recorded operating earnings of 73 cents per share in the third quarter 2014, falling short of the Zacks Consensus Estimate of 76 cents by nearly 3.9% and also lagging the year-ago earnings by 5.2%. Earnings declined on account of unfavorable weather.
Total Revenue
Xcel Energy's total revenue increased 1.7% year over year to $2,869.8 million in the reported quarter.
Quarterly revenue, however, missed the Zacks Consensus Estimate of $3,108 million by 7.7%.
Segment Revenue
Electric: Revenue from this segment increased a marginal 0.6% year over year to $2,616.3 million.
Natural Gas: Revenue from the Natural Gas business escalated 16.7% to $239.6 million.
Other: Segment revenue of $16.8 million in the reported quarter decreased 1.5% from $17.1 million in the year-ago period.
Quarterly Highlights
Total operating expenses climbed 2.2% year over year to $2,204.1 million. The increasing costs can be attributed to a rise in cost of natural gas sold and transported, program expenses and depreciation and amortization charges.
Operating income increased a slight 0.1% year over year to $665.7 million.
Total interest charges and financing costs, after Allowance for funds used during construction ("AFUDC"), decreased 1.4% year over year at the end of the third quarter 2014 to $133.3 million.
Financial Update
Total debt as of Sep 30, 2014, was $12.4 billion out of which long-term debt was $11.5 billion.
In Mar 2014, Xcel Energy issued $300 million of 4.30% first mortgage bonds due Mar 15, 2044. Again in May 2014, Xcel Energy issued $300 million, 4.125% first mortgage bonds due May 15, 2044. In Jun 2014, Xcel Energy issued $150 million, 3.30% first mortgage bonds due Jun 15, 2044. In the same month, Xcel Energy sold $100 million, 3.30% first mortgage bonds due Jun 15, 2044.
Guidance
Xcel Energy revised its 2014 earnings guidance to the range of $1.95 to $2.05 per share from the previous guidance of $1.90–$2.05 per share. The company initiated 2015 earnings guidance in a range of $2.00–$2.15 per share.
Xcel Energy expects capital expenditure from 2015 through 2019 to be around $14.5 billion.
Other Company Releases
CMS Energy Corp. (CMS) reported third-quarter 2014 adjusted earnings per share of 37 cents, lagging the Zacks Consensus Estimate of 41 cents by 9.8%.
Wisconsin Energy Corp. (WEC) posted third-quarter 2014 adjusted earnings of 57 cents per share, surpassing the Zacks Consensus Estimate by 11.8%.
Exelon Corp. (EXC) reported third-quarter 2014 operating earnings of 78 cents per share, surpassing the Zacks Consensus Estimate of 71 cents by 9.8%.
Our View
Xcel Energy missed our earnings estimates as rising expenses completely offset the benefit derived from the new rates. Revenues in the quarter also failed to impress as summer temperatures remained cooler than normal. Three out of four of Xcel Energy’s regulated utility subsidiaries incurred a loss.
A large portion of the company’s capital expenditure from 2015-2019 will be directed towards electric transmission and generation business. Investments in quality maintenance will help the company to provide reliable services to its customers.
However, uncertainty associated with regulatory rate cases might restrain the company from achieving its guidance.
Xcel Energy currently carries a Zacks Rank #4 (Sell).
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