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How Is Consolidated Edison Placed for 2Q16 Earnings?

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Consolidated Edison’s earnings

New York-based Consolidated Edison (ED) is expected to report its earnings on August 4, 2016. According to analyst estimates, it’s expected to report earnings of $0.69 per share for the quarter. For the same quarter last year, it posted earnings of $0.78 per share.

With more than 95% of earnings coming from regulated operations, Consolidated Edison is almost a pure-play regulated utility. The remaining 5% comes from its competitive operations.

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What factors could impact earnings?

Weather could significantly impact Consolidated Edison’s earnings in 2Q16, as it did in the previous quarter. In 1Q16, the company reported lower earnings due to mild weather. Warmer winter weather impacted steam revenues, and EPS (earnings per share) declined from $1.26 to $1.18 per share. However, management reaffirmed its 2016 earnings guidance of $3.85–$4.05 per share.

Consolidated Edison is tapping growth opportunities in the solar (TAN) and transmission segments that could drive its long-term earnings. The company is planning to sell its retail energy supply business by the end of this year. It’s part of the competitive energy business and accounts for 5% of its total earnings.

Consolidated Edison generally obtains lower ROE (return on equity) than the industry average due to lower allowed ROE from regulators. However, with its growing investments in transmission, ROE is expected to improve.

Peer Xcel Energy (XEL) is set to report its second quarter earnings on August 3, 2016. CenterPoint Energy (CNP) is expected to report on August 5, 2016.

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