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Edison International (EIX) Up 5.3% Since Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Edison International EIX. Shares have added about 5.3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is EIX 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 catalysts.

Edison International Beats on Q4 Earnings, Revenues

Edison International reported fourth-quarter 2017 adjusted earnings per share (EPS) of $1.10 from continuing operations, beating the Zacks Consensus Estimate of 93 cents per share by 18.3%. The bottom line also increased 13.4% from 97 cents in the year ago.

Excluding the one-time items, the company reported GAAP loss of $1.67 per share, against the year-ago quarter’s earnings of $1.01.

The company reported 2017 adjusted earnings of $4.50 per share, beating the Zacks Consensus Estimate of $4.32 by 4.2%. Earnings increased 13.4% from the year-ago figure of $3.97 per share.

Total Revenues

Edison International's fourth-quarter revenues were $3,220 million, beating the Zacks Consensus Estimate of $2,878 million by 11.9%. Also, revenues were up 11.7% from the year-ago quarter’s figure of $2,884 million.

Revenues in 2017 came in at $12.32 billion, beating Zacks Consensus Estimate of $12.15 billion. The top line also increased 3.8% from $ 11.86 billion in the year-ago quarter.

Operational Highlights

In the reported quarter, total operating expenses increased 39.6% to $3,236 million, mainly on account of higher purchasing power and fuel expenses (18.9%), operation and maintenance expenses (1.5%), and increased impairment and other charges.

Operating loss was $16 million in the reported quarter.

Interest expenses were $166 million in the quarter, higher than $150 million from the prior-year quarter.

Segment Results

Southern California Edison’s (SCE) fourth-quarter core earnings were $1.15 per share compared with $1.01 a year ago. The bottom line in the reported quarter increased due to higher revenues on account of an escalation mechanism set forth in the 2015 General Rate Case (GRC) decision.

Parent and other segments reported fourth-quarter core loss of 5 cent per share, a penny wider than the year-ago quarter’s loss of 4 cents. The decline reflects lower tax benefits related to stock-based compensation.

Financial Update

In 2017, cash and cash equivalents were $1,091 million, reflecting an increase from $96 million in 2016. Long-term debt was $11.64 billion, higher than the 2016-end level of $10.18 billion.

Net cash from operating activities in 2017 was $3,587 million, compared with $3,256 million in the prior year. Total capital expenditure amounted to $3,828 million during 2017, up $3,734 million from the prior-year quarter.

Guidance

After issuance of a final decision by CPUC on Southern California Edison 2018 GRC, the company will provide 2018 earnings guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.

Edison International Price and Consensus

 

Edison International Price and Consensus | Edison International Quote

VGM Scores

At this time, EIX has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

The company's stock is suitable solely for value based on our styles scores.

Outlook

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


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