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Dominion Energy’s Earnings Might Be Lower in Q2

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  • Analysts expect lower earnings from Dominion Energy in the second quarter.
  • Dominion Energy stock has underperformed its peers this year.

For the second quarter, Dominion Energy’s (D) earnings are scheduled to be released on July 31. According to consensus estimates, Dominion Energy will likely report an EPS of $0.76 for the quarter ending June 30. In the same quarter last year, the company reported an EPS of $0.86. Share dilution and mild weather during the quarter will likely be behind Dominion Energy’s lower earnings.

Earnings drivers

Analysts expect Dominion Energy to report total revenues of $4.20 billion in the second quarter, which indicates approximately 36% growth YoY (year-over-year). The company’s higher revenues are likely due to contributions from SCANA and Dominion Midstream Partners. The utility completed these two acquisitions in January. Mild weather during the quarter could have a negative impact on the utility’s second-quarter earnings.

Investors will be eager to know about Dominion Energy’s stalled Atlantic Coast Pipeline project. The 42-inch pipeline runs from West Virginia to eastern North Carolina. The pipeline suffered from delays and cost overruns due to environmental issues. Duke Energy (DUK) and Southern Company (SO) are partners in the Atlantic Coast pipeline project.

Dominion Energy’s management has given adjusted an EPS guidance range of $4.05–$4.40 for 2019. The guidance suggests earnings growth of approximately 4% YoY.

NextEra Energy (NEE) reported its second-quarter earnings this week. The company posted adjusted earnings growth of 13% YoY. The utility has been generating superior earnings growth for the last several quarters. Southern Company (SO) is scheduled to release its second-quarter earnings on July 31.

What’s next for Dominion Energy stock?

Dominion Energy stock has been underperforming its peers this year. The stock has risen 5%, while the Utilities ETF (XLU) has risen more than 15% in 2019. Currently, Dominion Energy stock is trading in the oversold zone. Several brokerage houses increased Dominion Energy’s target price. Guggenheim Securities raised its target price from $82.0 to $86.0 earlier this week. Credit Suisse also raised its target price from $77.0 to $83.0. Citigroup increased Dominion Energy’s target price to $79.0 from $74.0 on July 17.

Based on analysts’ estimates, Dominion Energy stock has a mean target price of $80.5, which suggests an estimated upside of 7.6% for the next 12 months. Currently, the stock is trading at $74.9. Among the 16 analysts covering Dominion Energy, 12 recommended a “hold,” two recommended a “buy,” and two recommended a “strong buy.” None of the analysts recommended the stock as a “sell” as of Friday.

To learn about top utilities’ recent performance and valuation, read Not All Utility Stocks Are Overpriced.

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