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Xcel Energy’s 4Q16 Earnings on February 2: What to Expect

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Xcel Energy’s 4Q16 Earnings on February 2: What to Expect PART 1 OF 6

Can Xcel Energy Meet Analysts’ Upbeat 4Q16 Revenue Prospects?

Xcel Energy’s revenues

Xcel Energy (XEL) is set to report its 4Q16 and 2016 financial results on February 2, 2017. According to analyst estimates, the company is expected to report total revenues of $3.2 billion for the quarter ended December 31, 2016. It reported revenues of $2.6 billion in 4Q15.

Xcel Energy has missed analysts’ revenue estimates for seven consecutive quarters.

Can Xcel Energy Meet Analysts’ Upbeat 4Q16 Revenue Prospects?

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Revenue drivers

Xcel Energy’s management altered its weather-normalized electric demand growth forecast to 0.50% for 2016. The previous forecast was 0.50%–1.0%. For some time, US electric utilities have been experiencing flat electricity growth due to energy efficiency programs.

According to the EIA (U.S. Energy Information Administration), cooling degree days during 4Q16 were 44.0% more than the ten-year average. So colder-than-normal weather during the fourth quarter might have resulted in higher electricity utilization, which is expected to positively impact utilities’ top lines.

According to the EIA, the average residential customer will consume 3.0% more electricity from December 2016 to March 2017 than during the same period in the previous year.

Xcel Energy maintained a customer base growth rate of ~1.0% in the first half of 2016, which is in line with industry standards. That could also be an important revenue driver in 4Q16.

Peers NextEra Energy (NEE) and Southern Company (SO) are scheduled to report their 4Q16 earnings on January 27, 2017, and February 1, 2017, respectively.

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