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Is Xcel Energy Attractive after Its 4Q16 Earnings?

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Part 2
Is Xcel Energy Attractive after Its 4Q16 Earnings? PART 2 OF 5

Xcel Energy’s 4Q16 Earnings Drivers and Growth Outlook

Xcel Energy’s earnings

Xcel Energy (XEL) posted earnings of $0.45 per share. It beat analysts’ estimates by $0.01 for the quarter ending on December 31, 2016. For 4Q15, it reported earnings of $0.41 per share.

Xcel Energy met its annual earnings guidance for the 12th consecutive year and earned $2.21 per share in 2016—nearly 6% earnings growth compared to Xcel’s 2015 EPS of $2.09 per share. The company’s management released its 2017 earnings guidance range of $2.25–$2.35 per share. It’s targeting long-term annual earnings growth of $4%–6%.

Xcel Energy’s 4Q16 Earnings Drivers and Growth Outlook

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Earnings drivers

Xcel Energy reported earnings of $1,123 million in 4Q16—compared to earnings of $1,064 million in 4Q15. Xcel Energy has been effectively managing its costs. It’s important to note that 2016 marks the third consecutive year with flat growth in operating and maintenance costs.

Xcel Energy’s decoupling proposal in Colorado and multiyear rate cases in Minnesota are expected to offer long-term earnings stability. The company is targeting a heavy portion of the total revenues to come from these multiyear rate plans. Multiyear rate plans generally reduce utilities’ (XLU) regulatory lag and boost the return on equity.

Xcel Energy expects its regulated rate base to grow 5.5% compounded annually for the next five years. Its capital spending plan of $15 billion during this period is expected to drive the company’s rate base.

To learn why Dominion Resources (D) stock crashed despite reporting strong 2016 earnings, read Dominion Resources’ 4Q16 Revenues Rose 20% but Stock Fell 6%.

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