WEC Energy (WEC) Up 4.9% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for WEC Energy Group (WEC). Shares have added about 4.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is WEC Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

WEC Energy Q1 Earnings Beat Estimates, Revenues Miss

WEC Energy delivered first-quarter 2020 adjusted earnings per share of $1.43, which beat the Zacks Consensus Estimate of $1.32 by 8.33%. The bottom line increased 7.5% from the year-ago quarter’s tally of $1.33.

Revenues

Total revenues amounted to $2,109 million, which missed the Zacks Consensus Estimate of $2,418 million by 12.7%. The reported figure declined 11.3% from $2,377 million in the year-ago quarter.

Highlights of the Release

Residential use of electricity in the first quarter fell 4.6% year over year. Electricity consumption by small commercial and industrial customers declined 2.6% year on year. Electricity used by large commercial and industrial customers, excluding iron ore mines, dropped 3.1% on a year-over-year basis. On a weather-normal basis, retail deliveries of electricity, excluding the iron ore mine, inched down 2%.

Natural gas deliveries in Wisconsin, excluding gas used for power generation, dropped 10.6% from the year-ago quarter’s reported figure. On a weather-normal basis, natural gas deliveries fell 1.1%.

At the end of the first quarter, the company had an additional 10,000 electric and 12,000 natural gas customers compared with the year-ago quarter’s level.

As of Mar 31, 2020, WEC Energy had cash and cash equivalents of $15.4 million compared with $37.5 million as of Dec 31, 2019.

As of Mar 31, 2019, the company had long-term debt of $3,870 million, compared with $3,769.3 million as of Dec 31, 2019.

The company’s net cash provided by operating activities at the end of the first quarter was $690.5 million compared with $735.7 million at the end of the first quarter of 2019.

Capital expenditure at the end of the quarter was $496.1 million compared with $358.8 million at the end of the year-ago quarter.

Guidance

The company reaffirmed 2020 earnings per share guidance in the range of $3.71-$3.75. The midpoint of the current guidance is $3.73, which is in line with the Zacks Consensus Estimate.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -12.44% due to these changes.

VGM Scores

At this time, WEC Energy has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, WEC Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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