WEC Energy (WEC) Down 4.7% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for WEC Energy Group, Inc. (NYSE:WEC) . Shares have lost about 4.7% in that time frame, outperforming the market.

Will the recent negative trend continue leading up to its next earnings release, or is WEC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Recent Earnings

WEC Energy Group reported fourth-quarter 2017 adjusted earnings of 71 cents per share, beating the Zacks Consensus Estimate of 67 cents by 5.9%. Earnings also surpassed the year-ago figure of 61 cents by 16.4%.

Revenues

WEC Energy’s total revenues amounted to $2,055.5 million, beating the Zacks Consensus Estimate of $1,945 million by 5.6%. Reported revenues also surpassed the year-ago figure of $1,963 million by 4.7%.

Highlights of the Release

Residential consumption of electricity in 2017 was down 3.3% year over year. Electricity utilized by small commercial and industrial customers also dropped 1.4% year over year. Electricity used by large commercial and industrial customers, excluding the iron ore mines in Michigan's Upper Peninsula, declined 0.4%.

Total operating expenses in the quarter under review was $1,642.9 million compared with $1,601.3 million in the year-ago quarter. Operating income in the reported quarter was $412.1 million, up 13.9% from $361.7 million a year ago. The company’s interest expenses in the fourth quarter increased 2.6% year over year to $105.3 million.

WEC Energy's utilities expanded the customer base in the reported quarter. At the end of 2017, the company had an additional 11,000 electric and 20,000 natural gas customers compared with the year-ago level.

Financial Position

As of Dec 31, 2017, WEC Energy had cash and cash equivalents of $38.9 million compared with $37.5 million as of Dec 31, 2016.

As of Dec 31, 2017, the company’s long-term debts of $8.74 billion decreased almost 4.5% from the 2016-end level.

In 2017, cash flow from operating activities was $2,079.6 million, lower than $2,103.5 million in 2016.

WEC Energy’s capital expenditure in 2017 was $1,959.5 million, higher than $1,423.7 million in 2016.

Guidance

WEC Energy Group expects first-quarter earnings to be in the range of $1.14-$1.16 per share.

The Company expects 2018 earnings in the range of $3.26-$3.30, and to improve earnings in the range of 5-7% annually over the long term.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

WEC Energy Group, Inc. Price and Consensus

WEC Energy Group, Inc. Price and Consensus | WEC Energy Group, Inc. Quote

VGM Scores

At this time, WEC has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. Charting a somewhat similar path, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than momentum investors.

Outlook

WEC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.