Zacks_Analysts' Blog : Con Edison Posts Mixed Numbers - Analyst Blog

Consolidated Edison Inc.’s (ED) fourth quarter earnings from continuing operations came in at 74 cents, beating the Zacks Consensus Estimate of 71 cents. Results also compared favorably with earnings from continuing operations of 69 cents in the year-ago quarter. On a reported basis, the company clocked earnings of 65 cents per share compared with 81 cents in the year-ago quarter.

The GAAP EPS variations reflect the year-over-year differences, where Con Edison of New York (CECONY) benefited by 14 cents per share as higher rates authorized higher recovery of costs and 1 cent from lower operations and maintenance expense. This was partially offset by 6 cents from higher depreciation and property taxes, and 4 cents from dilutive effects of new stock issuances.

The upshot was a 5-cent upside in EPS year over year while the Orange and Rockland utilities’ EPS was a penny higher. In the Competitive Energy businesses, EPS fell by 22 cents year over year.

Operational Results

Consolidated Edison reported operating revenue of approximately $3.0 billion, a decrease of $173 million over the year-ago quarter and $609 million lower than the Zacks Consensus Estimate of $3.6 billion. Of this Electricity revenues fell $70 million to $2.0 billion, Stream revenues fell $58 million to $426 million, and Non-utility revenues fell $52 million to $330 million.

Consolidated Edison’s earnings from ongoing operations were $219 million compared with $201 million in the year-ago quarter. Its net income was $190 million compared with $233 million in the year-ago quarter. Earnings were boosted by higher rates but were offset by higher depreciation and property taxes.

Dividend Update

Concurrent with the earnings release, Consolidated Edison hiked its quarterly dividend to 60.5 cents per share, representing an annualized dividend of $2.42. The dividend will be paid on March 15, 2012, to shareholders of record on February 15, 2012. This represents an annualized increase of 2 cents over the previous annualized dividend of $2.40 per share. This is the 38th consecutive annual dividend hike by the company.

Outlook

Consolidated Edison expects its EPS from ongoing operations for fiscal 2012 in the range of $3.65 – $3.85.

New York City-based Consolidated Edison is a diversified utility holding company with subsidiaries engaged in both regulated and unregulated businesses. Consolidated Edison’s regulated businesses operate through two subsidiaries — Consolidated Edison Company of New York (CECONY) and Orange and Rockland Utilities (O&R). 

Consolidated Edison of New York is a regulated utility in New York City and Westchester County. O&R serves electric and gas customers in southeastern New York State, northern New Jersey, and northeastern Pennsylvania. Consolidated Edison’s unregulated businesses operate through three subsidiaries – Consolidated Edison Development (engaged in infrastructure development), Consolidated Edison Energy (supplies energy in the wholesale market) and Consolidated Edison Solutions (provides retail energy).

Consolidated Edison is a predominantly regulated utility with multi-year rate plans for its services. However the stock is currently trading at a slight discount per the current fiscal earnings estimates vis-à-vis its peers like American Electric Power Company Inc. (AEP) and Edison International (EIX). Consolidated Edison currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. Considering the fundamentals, we are maintaining our Neutral recommendation on the stock.