Dominion Resources Inc. D reported third-quarter 2016 operating earnings of $1.14 per share, beating the Zacks Consensus Estimate of $1.04 by 9.6%. Earnings were also above management’s guidance range of 95 cents to $1.10 per share.Moreover, operating earnings increased 10.7% from $1.03 per share a year ago. The decline was due to the impact of milder weather, a planned refueling outage at Millstone and share dilution.GAAP earnings were $1.10 per share compared with $1.00 per share in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to transaction costs associated with the Dominion Questar combination and Dominion’s investments in nuclear decommissioning trust funds.
Total RevenueDominion’s operating revenues of $3,132 million in the third quarter marginally surpassed the Zacks Consensus Estimate of $3,131 million. Moreover, revenues were up nearly 5.4% year over year.Highlights of the ReleaseTotal operating expenses in the quarter increased 8.2% year over year to $2,000 million. The increase in total expenses was primarily due to a 37.9% surge in other operations and maintenance expenses.Interest and related charges in the reported quarter were $237 million, up 3.1% from the year-ago quarter.Dominion Virginia Power recorded 1% year-over-year growth in its customer base. Warmer-than-expected temperatures led to a 6.3% year-over-year upside in electricity sales volumes to 24,065 Gwh in the third quarter.
DOMINION RES VA Price, Consensus and EPS Surprise
Segment UpdateDominion Virginia Power recorded net income of $139 million or 22 cents per share in the third quarter of 2016, up 11.2% year over year.Dominion Energy recorded earnings of $135 million or 21 cents per share, down 11.8%.Dominion Generation’s earnings were up 66.7% to $650 million or $1.04 per share.Corporate and Others incurred a wider loss of $208 million than the year-ago loss of $57 million.Financial UpdateDominion exited third-quarter 2016 with cash and cash equivalents of $251 million, down from $607 million as of Dec 31 2015.Long-term debt as of Sep 30, 2016 was $24.4 billion compared with $23.5 billion at the end of 2015.Cash from operating activities in first nine months of 2016 was $3.39 billion, down 1.9% from $3.45 billion in the year-ago period.Looking AheadDominion expects to generate fourth-quarter 2016 operating earnings of 90 cents to $1.10 per share. In the year-ago quarter, the company had reported earnings of 70 cents.Dominion reaffirmed its earnings guidance for 2016 in the range of $3.60 to $4.00 per share.Peer ReleasesEntergy Corporation ETR reported third-quarter 2016 operational earnings of $2.31 per share, beating the Zacks Consensus Estimate of $1.95 by 18.5%.DTE Energy Company DTE reported third-quarter 2016 operating earnings per share of $1.96, beating the Zacks Consensus Estimate of $1.54 by 27.3%.CMS Energy Corporation CMS reported third-quarter 2016 adjusted earnings per share of 70 cents, beating the Zacks Consensus Estimate of 60 cents by 16.7%.Our ViewDominion’s earnings and revenues were both above expectations, backed by warmer-than-expected temperatures in its service territories.Going forward, the company is poised to gain from its organic and inorganic growth strategies. Dominion’s 1,358-megawatt (MW) natural gas combined-cycle facility had started operations in the second quarter, ahead of the company’s expectation and well within budget. The new plant contributed significantly to meet the increased demand during the reported quarter.The company also started construction of the 1,588-MW Greensville County combined-cycle power station, which will be able to power nearly 400,000 customers.Meanwhile, the company’s ongoing focus on increasing its clean generation capacity and strengthening the existing infrastructure will help Dominion serve its expanding customer base better. Incidentally, Dominion Virginia Power catered to 1% more customers in the third quarter than the prior-year period.Dominion Resources holds a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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