Eversource (ES) Down 5.2% Since Last Earnings Report: Can It Rebound?

It’s been about a month since Eversource Energy’s (ES) last earnings report. Shares have lost about 5.2% in that time, underperforming the S&P 500.

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

Eversource Energy Results Better in Q1, Sales Delay Estimates

Eversource Energy reported first-quarter 2024 adjusted earnings of $1.49 per share, which topped the Zacks Consensus Estimate of $1.45 by 2.8%. The bottom line increased by 5.7% compared to the previous year, which amounted to USD 1.41.

This increase was driven by higher levels of investment in the ES electric transmission system. This was necessary to address system efficiency gains and provide the region with clean energy resources. New rates for the distribution of electricity and natural gas also contributed to good financial results in the quarter.

Total revenues

ES’s revenues of $3.33 billion missed the Zacks Consensus Estimate of $4.14 billion. Total revenue also declined 12.2% from the prior year, which was $3.79 billion.

Release highlights

Total operating expenses were $2.48 billion, down 18.4% year-over-year. This was due to lower costs of purchasing electricity, purchased natural gas and transmission compared to the previous year’s quarter.

Interest income was $845.9 million, up 12.9% year over year.

Interest expense was $250.8 million, up 28.9% year over year.

Segment efficiency

Electric transmission: Profits were $176.7 million, up 13.9% year over year.

Electricity distribution: Earnings were $168.1 million, up 1.6% year-over-year. This was due to higher distribution system investment revenues and an increase in the base distribution rate for the company’s electricity operations in Massachusetts.

Natural gas distribution: Total profit was $190.6 million, up 11.9% year over year. Higher revenues related to investments in natural gas infrastructure and an increase in the basic distribution rate at NSTAR Gas resulted in this improvement.

Water distribution: Earnings were $5.4 million, up 260% year-over-year. The improvement was due to the contribution of acquired assets and lower depreciation costs.

Parent company Eversource and other companies: The segment reported a quarterly loss of $19 million, which was greater than the prior-year quarter’s loss of $1.2 million. This decline was due to higher interest costs, slightly offset by a lower effective tax rate.

Conductivity

Eversource Energy confirmed its 2024 earnings in the range of $4.50 to $4.67 per share. The Zacks Consensus Estimate is $4.51, down from $4.58, which is the company’s mid-range target.

The company expects long-term EPS growth rates in its existing core regulated businesses to be 5% to 7% through 2028, based on $4.34 per share earned in 2023.

In the years 2024-2028, it plans to invest USD 23.1 billion, of which almost USD 16.1 billion in electricity and natural gas distribution networks, and USD 7.2 billion in the electricity transmission segment.

How have estimates changed since then?

It turns out that the review of estimates has been trending upwards over the past month.

VGM results

Currently, Eversource has a weak Growth Score of D, but its Momentum Score is performing slightly better at C. Following the exact same trajectory, the stock is rated C on the value side, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of D. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company show an upward trend, and the scale of this correction was net zero. Notably, Eversource carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Eversource belongs to the Zacks Utility – Electric Power industry. Another stock in the same industry, NextEra Energy (NEE), has gained 13.6% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

NextEra reported revenue of $5.73 billion in its most recently reported quarter, representing a year-over-year change of -14.7%. EPS of $0.91 for the same period compared to $0.84 a year ago.

For the current quarter, NextEra is expected to report earnings per share of $0.90, which would represent a year-over-year change of +2.3%. Over the past 30 days, the Zacks Consensus Estimate has moved -0.6%.

NextEra carries a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of D.

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