Yahoo Finance Why Did Edison International Report a 10% Fall in Earnings?
Edison International's 1Q16: Is It Poised for Long-Term Growth?
Management retained guidance
Edison International (EIX) reported earnings of $268 million, or $0.82 per share, in 1Q16 compared to $294 million, or $0.90 per share, in the previous comparable quarter.
Edison International’s principal subsidiary, Southern California Edison, posted an earnings fall of $18 million. The fall was primarily driven by a delay in the decision of a General Rate Case and higher operating costs during the quarter. Earnings in the reported quarter also had the negative impact of lower incremental income tax benefits.
Edison International reiterated its earnings guidance of $3.81–$4.01 per share for 2016.
Earnings drivers
Edison International experienced higher operating expenses during the quarter, mainly driven by higher spending on fuel and purchase power. Depreciation was also higher in 1Q16, which further dragged its earnings by $0.02. This was as expected, considering Southern California Edison’s transmission-focused capital spending program.
Edison International has an ambitious capital budget. It plans to spend ~$4 billion annually for the next couple of years. The focus remains on its distribution and transmission segment, and it’s expected to expand its rate base significantly. Expected rate base growth of 7% through 2017 would support the 7% earnings growth EIX has targeted for the near future.
Edison International makes up 3.2% of the iShares US Utilities ETF (IDU). Its peers Sempra Energy (SRE) and Pacific Gas & Electric (PCG) make up 3.2% and 3.9% of IDU, respectively. Duke Energy (DUK) and NextEra Energy (NEE) are some of IDU’s top holdings. Edison International also makes up part of the iShares Global Infrastructure ETF (IGF).
What impact did Edison International’s 1Q16 earnings have on its stock price and valuation? Let’s have a look in the next article.
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