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Xcel Energy: What to Expect from Its 1Q17 Earnings

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Xcel Energy: What to Expect from Its 1Q17 Earnings PART 3 OF 7

Will Xcel Energy Meet Earnings Estimates in 1Q17?

Xcel Energy’s earnings

At $23 billion, Xcel Energy (XEL) is estimated to report earnings of $0.49 per share in 1Q17. In 1Q16, it reported earnings of $0.47 per share.

Xcel Energy’s management released its 2017 earnings guidance range of $2.25–$2.35 per share. It implies targeted annual earnings growth of 4.5% compared to 2016, which is roughly in line with the industry average and its projected long-term earnings growth.

Will Xcel Energy Meet Earnings Estimates in 1Q17?

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Long-term earnings drivers

Xcel Energy obtains most of its earnings from regulated operations, which bodes well for stable growth. It generates 90% of its earnings from electric operations, while the rest of its earnings come from gas operations.

Xcel Energy files multiyear rate plans for 67% of its rate base. Multiyear rate cases offer regulatory certainty and effectively reduce regulatory lags. A regulatory lag is a delay in the recovery of investments due to the time regulators take to approve rates.

Xcel Energy’s capital spending plan of $18.4 billion for 2017–2021 is expected to grow the company’s regulated rate base substantially. Rate base growth of 5.5% through 2021 might bode well for long-term earnings growth.

Remember, earnings stability is important for utility investors because it generally drives utilities’ dividend payments.

To learn what’s happening with Southern Company (SO), one of the largest regulated utilities in the sector (XLU), read Southern Company: Westinghouse Issue Hints at a Thorny Path Ahead.

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