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A Look at Duke Energy’s Expected 4Q16 Earnings and Its Drivers

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Feb. 7 2017, Updated 9:08 a.m. ET

Duke Energy: Earnings

Duke Energy (DUK) is estimated to report earnings per share (or EPS) of $0.81 for the quarter ended December 31, 2016. It reported EPS of $0.87 in 4Q15.

Duke Energy has an earnings guidance range of $4.50–$4.70 per share for 2016. It’s likely to achieve the higher end of its earnings guidance if it achieves its expected 4Q16 earnings.

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Expected earnings drivers

Duke Energy (DUK) seems poised to achieve 4%–6% earnings growth through 2020, which its management expects. Duke Energy’s Piedmont natural gas acquisition could accelerate the growth of its regulated utilities (XLU), as it could have easier access to cost-effective natural gas.

Duke Energy is in the process of selling a part of its International Merchant business, which could fortify its regulated operations and could boost its earnings stability. Duke Energy’s agreement to sell its Latin American generation segment could also improve its return on equity.

Duke Energy looks strong despite the fact that some fundamental factors don’t favor utilities. Slowing demand growth of electricity consumption and the higher possibility of rate hikes this year may make utilities vulnerable. However, Duke Energy seems well placed to achieve fair earnings growth and to deliver healthy dividends.

Peer Dominion Resources (D) stock fell on its 4Q16 earnings day after its management conveyed a gloomy outlook for 2017. To learn more, please read Dominion Resources’ 4Q16 Revenues Rose 20% but Stock Fell 6%.

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