Analyzing Duke Energy’s Expected 3Q16 Earnings and Its Drivers



Duke will report its earnings on November 4

Duke Energy (DUK) is the second-largest utility by market capitalization. It will report its 3Q16 financial results on November 4, 2016. According to analysts’ estimates, Duke is expected to earn $1.57 per share—compared to its earnings of $1.47 per share in the same quarter last year. Duke Energy has an earnings guidance range of $4.50–$4.70 per share for 2016.

Duke Energy is growing steadily. More than 90% of its profits come from regulated operations. It agreed to sell a major part of its international business this month. It will likely fortify its regulated operations. It could boost earnings stability even more.


Article continues below advertisement

Earnings drivers

Duke is estimated to earn revenue of $6.9 billion in 3Q16, while it earned revenue of $6.5 billion in the same quarter last year. The revenue is expected to be higher mainly because of the favorable weather during the third quarter.

Duke experienced rolling 12-month retail sales growth near 0.3% in the first two quarters of 2016. The lower usage per customer might partially offset the increased customer base. Its total annual growth in new customers is roughly in line with the industry average of 1.4%.

Long-term drivers

Duke’s agreement to sell its Latin American (ILF) generation segment might reduce its earnings volatility and improve its return on equity.

Duke seems well placed to achieve 4%–6% earnings growth through 2020, as its management expects. Duke’s Piedmont Natural Gas acquisition will likely accelerate the growth in its regulated utilities (XLU). It will have easier access to cost-effective natural gas.


More From Market Realist