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Dominion Resources Closes 2016 Strong, Issues Gloomy 2017 Outlook

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Dominion Resources: Earnings

Dominion Resources (D) reported 4Q16 earnings per share (or EPS) of $0.99 against estimates of $1.00 per share. In 4Q15, it reported operating EPS of $0.70. Dominion Resources’s earnings in 4Q16 fell comfortably within the management’s guidance range of $0.90–$1.05 per share.

Dominion Resources’s earnings during 4Q16 were positively impacted by the overall strong performance from its principal utilities, Dominion Virginia Power, Dominion Generation, and Dominion Energy.

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Dominion’s gloomy outlook for 2017

Dominion Resources (D) released its 2017 earning guidance range of $3.40–$3.90 per share. Its 2016 earnings stood at $3.80 per share. Based on the midpoint of the guidance range, Dominion’s earnings per share in 2017 are expected to be ~4% lower.

Dominion Resources’s earnings in 2017 are expected to be negatively affected primarily by the reduction in Cove Point import contract revenues, Millstone refueling outages, lower hedged power prices at Millstone, and lower solar investments tax credits. On the other hand, Questar’s integration with Dominion is expected to have a positive impact on its 2017 earnings.

Dominion Resources also released its 1Q17 EPS guidance range of $0.90–$1.10.

The poor outlook for 2017 may not be that negative for Dominion Resources and its investors, as the company noted that its 2018 expected earnings are projected to have “at least” 10% growth year-over-year. From 2018–2020, Dominion Resources’s earnings are expected to increase 6%–8% compounded annually, which is higher than the industry average.

Dominion’s management is targeting an annual dividend increase that exceeds 8% from 2018–2020, which is also well above the industry average (XLU) of ~4%.

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