Why Is Edison International (EIX) Down 21.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Edison International (NYSE:EIX). Shares have lost about 21.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Edison International 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 catalysts.

Edison International's Q4 Earnings Miss, Revenues Fall

Edison International reported fourth-quarter 2019 adjusted earnings of 99 cents per share, which missed the Zacks Consensus Estimate of $1.04 by 4.8%. The bottom line, however, climbed 5.3% from the 94 cents registered in the year-ago quarter.

Excluding adjustments, quarterly earnings came in at 40 cents per share from continuing operations as against the loss of $4.39 per share reported in the year-earlier quarter.

For 2019, the company’s adjusted earnings of $4.70 per share lagged the Zacks Consensus Estimate of $4.75 by 1.1%. However, the reported figure increased 13.3% from the prior year’s $4.15.

Total Revenues

Edison International's fourth-quarter revenues came in at $2,970 million, missing the Zacks Consensus Estimate of $3,064 million by 3.1%. Moreover, the top-line figure edged down 1.3% from the year-ago quarter’s $3,009 million.

For 2019, the company’s revenues totaled $12,347 million, which missed the Zacks Consensus Estimate of $12,470 million by 1% as well as dropped 2.4% from the year-ago quarter’s $12,657 million.

Operational Highlights

In the December-end quarter, total operating expenses plummeted 46.9% year over year to $2,683 million, mainly on account of reduced wildfire-related claims, net of insurance recoveries.

Operation and maintenance costs rose 4.3% year over year to $760 million, while purchased power and fuel costs slid 6.7% to $991 million. Depreciation and amortization expenses also declined 2.1% year on year to $470 million.

Edison International posted an operating income of $287 million in the fourth quarter, as against the loss of $2,041 million reported in the prior-year quarter.

Interest expenses were $222 million, higher than the $196 million recorded in the prior-year quarter.

Segment Results

Southern (NYSE:SO) California Edison’s (SCE) quarterly earnings came in at 54 cents per share, as against the year-ago quarter’s net loss of $4.38 per share. This upside chiefly resulted from the adoption of the 2018 General Rate Case (GRC) final decision and higher Federal Energy Regulatory Commission (FERC) revenues.

The Parent and Other segment incurred a loss of 14 cents per share in the October-December period, wider than the year-ago quarter’s loss of 11 cents. The downside is primarily a result of higher interest expenses and corporate expenses.

Financial Update

As of Dec 31, 2019, cash and cash equivalents were $68 million compared with $144 million as of Dec 31, 2018.

Long-term debt amounted to $17.86 billion, higher than the 2018-end level of $14.63 billion.

Net cash used in operating activities during 2019 was $307 million as against the cash inflows of $3,177 million in the prior year.

Total capital expenditures summed $4,877 million at 2019 end, up from the previous year’s $4,509 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted 25.64% due to these changes.

VGM Scores

At this time, Edison International has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Edison International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.