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Why Is WEC Energy (WEC) Down 4.6% Since Last Earnings Report?

A month has gone by since the last earnings report for WEC Energy Group (WEC). Shares have lost about 4.6% in that time frame, underperforming the S&P 500.

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

WEC Energy Q1 Earnings Top Estimates, Revenues Lag

WEC Energy Group reported first-quarter 2024 earnings of $1.97 per share, which beat the Zacks Consensus Estimate of $1.89 by 4.2%. The bottom line also improved 22.4% from the year-ago quarter’s figure of $1.61 per share.

Revenues

Operating revenues of $2.68 billion missed the Zacks Consensus Estimate of $3.07 billion by around 12.6%. The top line also declined 7.2% from $2.89 billion recorded in the year-ago quarter.

Highlights of the Release

Electricity consumption by small commercial and industrial customers increased 0.7%. The same for large commercial and industrial customers, excluding the iron ore mine, decreased 0.7% on a year-over-year basis.

On a weather-normal basis, retail deliveries of electricity, excluding the iron ore mine, declined 0.2% during the same time frame.

Total electric sales volume for the quarter was 10,517.1 thousand megawatt-hours, up 0.6% year over year.

Total operating expenses were $1.87 billion, down 15.7% from the year-ago quarter’s level of $2.22 billion. This was due to the lower cost of sales.

Operating income totaled $813.4 million, up 21.5% from $669.3 million recorded in the year-ago quarter.

The company incurred an interest expense of $192 million, up 11.5% from the prior-year quarter’s level of $172.2 million.

Financial Position

As of Mar 31, 2024, WEC had cash and cash equivalents of $38.9 million compared with $42.9 million as of Dec 31, 2023.

As of Mar 31, 2024, the company had a long-term debt of $15.4 billion compared with $15.5 billion as of Dec 31, 2023.

Net cash provided by operating activities during the first three months of 2024 was $863.6 million compared with $796.1 million in the year-ago period.

Guidance

WEC reaffirmed its 2024 earnings projection in the range of $4.80-$4.90 per share. The Zacks Consensus Estimate for the same is pegged at $4.87 per share, higher than the midpoint of the company’s guided range.

WEC Energy Group expects to invest $23.7 billion in the 2024-2028 period.

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How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -20.81% due to these changes.

VGM Scores

Currently, WEC Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 this revision indicates a downward shift. It's no surprise WEC Energy has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

WEC Energy is part of the Zacks Utility - Electric Power industry. Over the past month, Xcel Energy (XEL), a stock from the same industry, has gained 1%. The company reported its results for the quarter ended March 2024 more than a month ago.

Xcel reported revenues of $3.65 billion in the last reported quarter, representing a year-over-year change of -10.6%. EPS of $0.88 for the same period compares with $0.76 a year ago.

For the current quarter, Xcel is expected to post earnings of $0.50 per share, indicating a change of -3.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.6% over the last 30 days.

Xcel has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.

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