What's In Store For Consolidated Edison (ED) In Q3 Earnings?
Zacks Investment Research | Oct 30, 2017 10:00PM ET
Consolidated Edison, Inc. (NYSE:ED) is set to report third-quarter 2017 results on Nov 2, after the closing bell.
Last quarter, the company posted a negative earnings surprise of 4.92%. However, the company surpassed the Zacks Consensus Estimate in three of the past four quarters, with an average earnings beat of 1.37%.
Let’s see how things are shaping up at the company prior to this announcement.
Factors at Play
Consolidated Edison has been investing to enhance its renewable generation assets of late. During second-quarter 2017, the company’s renewable energy production volumes improved a 46.1%, leading to an increase of $36 million in renewable revenues.
The company in August announced that its installation plans of solar panels on company roofs and grounds have been approved. Under the initial phase of this strategy, Consolidated Edison expects to generate 3 megawatts of power through the installation that will serve 800 to 1,600 customers, primarily in Brooklyn, Queens and Westchester County.
The upcoming third-quarter’s results are expected to benefit from this initiative. Also further updates on progress of the same are expected to come when the company reports its quarterly numbers.
Moreover, the company's service territories witnessed warmer-than-normal temperatures during the quarter. This will result in higher household expenditure on cooling and, in turn, will most likely boost revenues for this energy provider.
However, the company faces interest rate risk owing to variable rate debt and to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities. Management estimates that as of Jun 30, 2017, the company witnessed a 10% increase in interest rates due to its variable rate debt. This will result in an increase in annual interest expense of $3 million. We expect the upcoming result to reflect a portion of this interest expense, which might put pressure on its earnings.
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings reflects a rise of 0.7% year over year, whereas sales are anticipated to drop 7.8% to $3.14 billion.
Earnings Whisper
Our proven model does not show that Consolidated Edison will beat earnings this quarter. Notably, a stock needs to have both a positive Zacks Investment Research
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