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Consolidated Edison: A Shock to Revenues

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On February 16th, the public received a rude shock as shares of Consolidated Edison, Inc. (ED) took a 1% tumble, closing at $87.32. This unpleasant surprise came on the heels of the company’s Q4 2023 earnings report, which didn’t quite meet expectations.

Earnings Performance

The company reported adjusted earnings of $1 per share for Q4 2023, surpassing the Zacks Consensus Estimate of 98 cents by 2%. This also marked a substantial 23.5% increase from the prior-year quarter’s figure of 81 cents. Meanwhile, the GAAP earnings for the quarter stood at 97 cents per share, a notable surge from the 53 cents reported in the Q4 of 2022.

Revenues Woes

Despite the positive earnings surprise, the company’s total revenues for the quarter failed to impress, coming in at $3,444 million, which missed the Zacks Consensus Estimate of $3,744 million by 8%. This represented a significant drop of 14.6% from the $4,031 million recorded in the same quarter of the previous year. The decline was largely attributed to diminished gas, steam, and non-utility revenues.

Operating Challenges

In the same quarter, Consolidated Edison’s operating expenses experienced a 14% year-over-year decrease to $2,992 million. Notably, fuel expenses saw a substantial 59.4% drop, while other operations and maintenance expenses were down 17.1%. However, the notable 13.2% rise in depreciation and amortization expenses, coupled with a 0.5% increase in taxes, countered the overall reduction in operating costs. Consequently, the company’s operating income dwindled by 18% year over year to $451 million.

Financial Tidings

As of December 31, 2023, Consolidated Edison’s cash and temporary cash investments amounted to $1,189 million, down from $1,282 million a year earlier. The company’s long-term debt also saw an uptick, reaching $21,927 million compared to the $20,147 million reported at the end of 2022. Furthermore, cash from operating activities for 2023 plummeted to $2,156 million, a stark contrast to the $3,935 million generated in the prior year.

Future Outlook

Looking ahead, Consolidated Edison initiated its 2024 guidance, forecasting an adjusted earnings per share in the range of $5.20-$5.40. The company also aims for a five-year compounded annual adjusted earnings per share growth rate of 5-7%, based on its 2024 adjusted EPS guidance, signifying a cautious yet positive outlook.

Market Comparisons

Notably, in an industry context, Consolidated Edison’s performance was juxtaposed with other utility companies such as DTE Energy Company (DTE), Xcel Energy (XEL), and CMS Energy Corporation (CMS), each facing their own set of challenging circumstances. These comparative analyses shed light on the broader performance dynamics within the sector.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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