Why Duke Energy Earnings Are Continuing to Slip

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Duke Energy Corp. (NYSE: DUK) reported its fourth-quarter financial results before the markets opened on Thursday. Over the past year, the firm’s adjusted results have been driven by favorable weather, strong cost control and benefits from an early close of the Piedmont Natural Gas acquisition, which has helped to offset significant storm costs and higher interest expense. However, these mixed fourth-quarter results don’t appear to be enough for investors.

The company said that it had $0.81 in earnings per share (EPS) and $5.62 billion in revenue. The consensus estimates from Thomson Reuters called for $0.81 in EPS on $5.89 revenue of billion. The same period of last year reportedly had EPS of $0.87 and $5.32 billion in revenue.

In terms of guidance for the 2017 full year, Duke set its adjusted diluted EPS guidance range at $4.50 to $4.70, and extended its long-term adjusted diluted EPS growth rate of 4% to 6% to 2021. The consensus estimates are $4.60 in EPS and $24.57 billion in revenue for the full year.

The company reported its business segment results for the fourth quarter as follows:

  • Electric Utilities and Infrastructure recognized fourth quarter 2016 segment income of $483 million, compared to $569 million in the fourth quarter of 2015.
  • Gas Utilities and Infrastructure reported adjusted segment income of $89 million, compared to $14 million.
  • Commercial Renewables recognized segment income of $10 million, compared to $17 million.

On the books, Duke Energy cash and cash equivalents totaled $392 million at the end of the quarter, up from $383 million at the end of the previous year.

Lynn Good, board chair, president and chief executive of Duke Energy, commented:

2016 was a transformational year for Duke Energy as we acquired Piedmont Natural Gas and exited our International business, positioning the company for more consistent earnings and cash flow growth. We continue to advance our long-term growth strategy to modernize the energy grid, generate cleaner energy and expand natural gas infrastructure. Our employees’ commitment to industry-leading operational and safety performance, combined with our unwavering focus on cost management, enabled us to achieve financial results at the high end of our guidance range.

Shares of Duke Energy closed Wednesday at $76.78, with a consensus analyst price target of $79.78 and a 52-week trading range of $72.34 to $87.75. Following the release of the earnings report, the stock was down almost 1% at $76.07 in early trading indications Thursday.