Duke Energy (DUK) Q3 Earnings Top Estimates, Revenues Up Y/Y

Duke Energy Corporation (NYSE:DUK) reported third-quarter 2018 adjusted earnings of $1.65 per share, which surpassed the Zacks Consensus Estimate of $1.53 by 7.8%. Quarterly earnings also improved 3.8% year over year. This upside was primarily driven by higher retail electric sales volumes and income tax benefits, partially offset by higher storm restoration costs and share dilution.

Barring one-time adjustments, the company reported GAAP earnings of $1.51 in the reported quarter compared with $1.36 in the prior-year quarter.

Total Revenue

Total operating revenues came in at $6,628 million, up 2.3% from $6,482 million a year ago. The reported figure also surpassed the Zacks Consensus Estimate of $6,345.2 million by 4.5%.

The regulated electric unit’s revenues totaled $6,216 million (up 2.1%), representing approximately 93.8% of the company’s quarterly total revenues. Revenues from the regulated natural gas business summed $230 million (down 6.98%). Moreover, its non-regulated electric and other segment generated revenues of $182 million, up 26.4% year over year.

Operational Update

Duke Energy’s total operating expenses were $5,059 million in the quarter, up from $4,827 million a year ago. Costs flared up owing to excessive fuel used in electricity generation and purchased power, operation, maintenance and other expenses, depreciation and amortization expenses as well as property and other taxes.

Consequently, operating income in the quarter decreased to $1,579 million from $1,661 million a year ago.

Interest expenses rose 3.8% to $517 million from $498 million a year ago.

Quarterly Segmental Highlights

Electric Utilities & Infrastructure: Adjusted income in the quarter was $1,175 million, up from $1,104 million a year ago. The upside can be attributed to strong weather-normal retail volumes, more favorable weather, higher rider revenues, contribution from the Duke Energy Progress (DEP) and Duke Energy Carolinas (DEC) North Carolina rate cases as well as lower income tax expense.

Gas Utilities & Infrastructure: Adjusted income of $18 million at this segment demonstrated a slip from $19 million in the year-ago quarter as growth from midstream investments offset by higher O&M expense.

Commercial Renewables: This segment reported adjusted income of $26 million in the quarter compared with $7 million a year ago. Higher quarterly earnings at this segment were primarily driven by a new solar project placed in service.

Other: The segment includes corporate interest expenses not allocated to other business units, results from Duke Energy’s captive insurance company and other investments.

Adjusted net loss were $40 million, up from $20 million in the year-ago quarter.

Financial Condition

As of Sep 30, 2018, the company had cash & cash equivalents of $303 million, down from $358 million as of Dec 31, 2017. Long-term debt (including VIEs) was $50.51 billion at the end of the third quarter compared with $49.04 billion as of Dec 31, 2017.

In the first nine months of the year, net cash from operating activities amounted to $5,667 million compared with $4,978 million in the year-ago period.

Guidance

Duke Energy narrowed its 2018 adjusted earnings guidance range to $4.65 to $4.85 per share, from the prior range of $4.55−$4.85.

Zacks Rank

Duke Energy presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

NiSource Inc (NYSE:NI) reported operating earnings of 10 cents per share in third-quarter 2018, beating the Zacks Consensus Estimate of 6 cents by 66.7%. Earnings increased 42.8% from the year-ago quarter’s tally.

DTE Energy Co. (NYSE:DTE) reported third-quarter 2018 operating earnings per share of $2.13, which outpaced the Zacks Consensus Estimate of $1.74 by 22.4%.

FirstEnergy Corp. (NYSE:FE) reported third-quarter 2018 operating earnings of 80 cents per share, exceeding the Zacks Consensus Estimate of 73 cents by 9.59%.

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