Why Is SCANA (SCG) Down 8% Since The Last Earnings Report?

It has been about a month since the last earnings report for SCANA Corporation (NYSE:SCG) . Shares have lost about 8% in that time frame, underperforming the market.

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

Second-Quarter 2017 Results

SCANA’s second-quarter 2017 earnings of $0.85 per share beat the Zacks Consensus Estimate of $0.74. The bottom line also increased from $0.74 in the year-ago comparable quarter. The growth can be attributed to higher electric and gas margins, owing to increase in customer base.

Quarterly operating revenues of $1,001 million increased from $905 million in the year-ago comparable quarter.

Segment Performance

South Carolina Electric & Gas Company (SCE&G):Quarterly earnings from this segment, SCANA's principal subsidiary, were 88 cents per share, up 11.4% from 79 cents in the year-ago quarter. Higher electric and gas margins along with lower expenses primarily led to the growth.

As of Jun 30, SCE&G was serving about 362,000 natural gas customers, up 2.9% annually and 718,000 electric customers, up 1.6% annually.

PSNC Energy:This segment recorded profit of $0.01 per share during the second quarter compared with breakeven result in the prior-year quarter. The upside was driven by customer growth and improved gas margin.

SCANA Energy Marketing:The segment posted earnings of $0.01 per share compared with breakeven in the year-ago comparable quarter. This was attributable to increased gas margin, which came on the back of improvement in sales volumes.

Corporate and Other, Net:This business segment recorded a loss of $0.05 per share and remained flat on a year-over-year basis.

Expenses

During the second quarter, the company reported operating expenses of $752 million compared with $684 million in the prior-year quarter.

Guidance

SCANA reaffirmed its 2017 GAAP-adjusted weather-normalized earnings guidance in the range of $4.15–$4.35 per share. The company continues to expect average annual growth rate for adjusted earnings in the range of 4–6% over the next three to five years.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. While looking back an additional 30 days, we can see even more downside. There have been two moves down in the last two months.

SCANA Corporation Price and Consensus

VGM Scores

At this time, SCANA's stock has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile 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.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #4 (Sell). We expect below average returns from the stock in the next few months.