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Why Is Eversource (ES) Down 10.3% Since Last Earnings Report?

A month has gone by since the last earnings report for Eversource Energy (ES). Shares have lost about 10.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Eversource due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Eversource Energy Q1 Earnings & Sales Beat Estimates

Eversource Energy reported first-quarter 2023 operating earnings of $1.41 per share, which surpassed the Zacks Consensus Estimate of $1.36 by 3.7%, increasing 8.5% year over year.

Revenues

First-quarter revenues of $3,795.6 million surpassed the Zacks Consensus Estimate of $3,714 million by 2.2%. Total revenues improved 9.4% from the year-ago figure of $3,471.3 million.

Highlights of the Release

Operating expenses increased 8.5% year over year to $3,046.1 million due to a rise in Purchased Power, Fuel and Transmission expenses and higher spending on energy efficiency programs.

Operating income was up 13.1% from the prior-year quarter at $749.6 million. Interest expenses increased 26.9% from the prior-year quarter to $194.6 million.

Net income for the quarter under review was $493.1 million, up 10.7% from $445.3 million recorded in the year-ago period.

Segmental Performance

Electric Transmission: Earnings from this segment were $155.1 million, up 4.5% from the prior-year quarter. The increase primarily resulted from a higher level of investment in Eversource’s electric transmission system.

Electric Distribution: Earnings from this segment were $165.5 million, up 17.5% from the prior-year quarter. The improved first-quarter results were due to higher revenues and the aforementioned seasonal rate design changes at NSTAR Electric Company.

Natural Gas Distribution: Earnings from this segment for the first quarter were $170.3 million, up 3.8% from the year-ago quarter on higher revenues due to rate adjustments in late 2022.

Water Distribution: Earnings from this segment were $1.5 million, down from $3.7 million in the year-ago quarter. The year-over-year decline was due to higher operational and maintenance expenses.

Eversource Parent & Other Companies: The segment lost $1.2 million, narrower than $13.7 million loss in the year-ago quarter.

Guidance

Eversource Energy expects earnings of $4.25-$4.43 per share for 2023. The mid-point of earnings guidance is $4.34, a tad lower than the Zacks Consensus Estimate of $4.36 for the year.

The company also reaffirmed its expectations for long-term earnings per share growth rate from the existing core regulated businesses in the upper half of 5-7% through 2027, using the $4.09 earned in 2022 as a base.

Eversource Energy plans to invest $4.46 billion in 2023. Its total capital expenditure for 2023-2027 is expected to be $21.5 billion.

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How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Eversource has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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