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Duke Energy (DUK) Meets Q4 Earnings, Provides 2017 View

Zacks

Duke Energy Corporation DUK reported fourth-quarter 2016 adjusted earnings of 81 cents per share in line with the Zacks Consensus Estimate. Quarterly earnings however declined 6.9% year over year owing to higher planned operation and maintenance expenses as well as and higher interest expenses, partially offset by Piedmont's earnings contribution and net of financing costs.

For 2016, the company reported adjusted EPS of $4.69 in line with the Zacks Consensus Estimate. Year over year, this figure improved 3.3% from $4.54 in 2015.

Total Revenue

In the fourth quarter of 2016, the company’s total operating revenue was $5,624 million, up 15.9% from $4,851 million a year ago. Nevertheless, the reported figure missed the Zacks Consensus Estimate of $5,862 million by 4.1%.

For 2016, the company generated total revenue of $22.74 billion, which missed the Zacks Consensus Estimate of $23.82 billion by 4.5%. However, revenues improved 0.7% from $22.37 billion in 2015.

The regulated electric unit’s revenues were $21,221 million (down 0.7%), representing approximately 93.3% of the company’s quarterly total revenue. Revenues from the regulated natural gas business were $863 million (up 61%). Its non-regulated electric and other segment generated revenues were $659 million, up 44.5% year over year.

Operational Update

The company’s total operating expenses were $17,429 million in 2016, up from $17,323 million a year ago. Costs increased on account of higher cost of natural gas, operation, maintenance and other expenses, depreciation and amortization expenses and property as well as other taxes.

Operating income in 2016 increased to $5,341 million from $5,078 million a year ago.

Interest expenses rose to $1,916 million from $1,527 million a year ago.

Quarterly Segmental Highlights

Regulated Utilities: Adjusted income in the quarter was $483 million, down from $569 million a year ago. The downside can be attributed to higher operation and maintenance expenses, higher effective tax, higher interest expenses and amortization as well as depreciation expenses.

Gas Utilities & Infrastructure: Adjusted income of $89 million at this segment demonstrated an improvement from $14 million in the year-ago quarter.

Commercial Renewables: This segment reported adjusted income of $10 million in the quarter compared with $17 million a year ago. The decline was led by lower investment tax credits due to lower solar investments.

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

Adjusted net expenses were $209 million, up from $170 million in the year-ago quarter.

Duke Energy Corporation Price, Consensus and EPS Surprise


Duke Energy Corporation Price, Consensus and EPS Surprise | Duke Energy Corporation Quote

Financial Condition

As of Dec 31, 2016, the company had cash & cash equivalents of $392 million, up from $383 million as of Dec 31, 2015. Long-term debt was $45.6 billion compared with $36.8 billion as of Dec 31, 2015.

In 2016, net cash from operating activities was $6,798 million compared with $6,676 million a year ago.

Guidance

The company expects to report its 2017 adjusted EPS in the range of $4.50−$4.70.

Zacks Rank

Duke Energy presently carries a Zacks Rank #4 (Sell).

Peer Releases

American Electric Power Co., Inc. AEP reported fourth-quarter 2016 operating EPS of 67 cents, beating the Zacks Consensus Estimate of 55 cents by 21.8%. The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NextEra Energy, Inc. NEE reported fourth-quarter 2016 adjusted EPS of $1.21, missing the Zacks Consensus Estimate of $1.29 by 6.2%. Nonetheless, reported earnings were up 3.4% year over year. The company holds a Zacks Rank #2 (Buy).

CMS Energy Corp. CMS reported fourth-quarter 2016 adjusted EPS of 29 cents, in line with the Zacks Consensus Estimate. Quarterly earnings, however, tanked 23.7% year over year. The company carries a Zacks Rank #3 (Hold).

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