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Dominion Resources: Will It Post Strong 1Q17 Earnings?

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Dominion Resources: Will It Post Strong 1Q17 Earnings? PART 1 OF 7

Will Dominion Resources Beat 1Q17 Revenue Estimates?

Dominion Resources 

Dominion Resources (D) is set to report its 1Q17 financial results on May 4, 2017. According to analysts’ estimates, the utility is expected to report total revenues of $3.54 billion for the quarter. For the same quarter last year, Dominion Resources reported revenues of $2.92 billion.

Analysts’ revenue estimates seem a little aggressive given flattish electricity consumption growth for the last few years.

Will Dominion Resources Beat 1Q17 Revenue Estimates?

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Revenue drivers

Weather plays an important role in driving utilities’ performance. Weather triggers electricity consumption in the residential sector. In the US, heating degree days in 1Q17 were 5% lower than heating degree days in 1Q16. Mild weather might have a negative impact on utilities’ (XLU) first quarter revenues.

Dominion Resources obtains revenues from its diversified electric and gas operations. It has core operations in electric and gas distribution. The company has been expanding in midstream and solar domains.

Electricity demand growth is expected to stay subdued in 2017 due to energy efficiency programs. According to the U.S. Energy Information Administration, electricity generation is estimated to fall 0.7% this year—compared to 2016. Lower electricity generation could have a negative impact on utilities’ revenues this year. On the positive side, electricity prices are expected to increase this year, which might partially offset the effect. We’ll discuss US electricity prices in detail in the next part of the series.

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