DTE Energy Co. (DTE) announced its fourth-quarter 2010 operating earnings of 88 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents. The results of the company were also higher than 72 cents reported in the year-ago quarter.
GAAP earnings in the quarter were 90 cents per share versus 72 cents per share in the fourth quarter of 2009. The 2-cent difference between the GAAP and operating earnings was due to the Detroit Edison settlement with Detroit Thermal.
DTE Energy’s 2010 operating earnings were $3.60 per share compared with $3.30 per share reported in 2009. The results of the company were a penny higher than the Zacks Consensus Estimate, as provided by 11 covering analysts.
GAAP earnings for the year were $3.74 per share versus $3.24 per share recorded in 2009. The difference between GAAP and operating earnings in 2010 was due to a 2-cent impactof the Detroit Edison settlement with Detroit Thermal and a 12-cent accretion from the deferral of costs to achieve restructuring expenses for the Performance Excellence Process approved in the June 2010 MPSC rate order.
Total Revenue
Total revenue at DTE Energy at the end of the fourth quarter was $2,173.0 million versus $2,121.0 million in the year-ago period, reflecting a growth of 2.5%.
Reported quarter revenue missed the Zacks Consensus Estimate of $2,369 million.
DTE Energy’s total revenue for 2010 was $8,557.0 million versus $8,014.0 million reported in the prior fiscal year, reflecting a growth of 6.8%.
Fiscal year 2010 revenue also fell short of the Zacks expectation of $8,583 million.
Segment Update
Electric Utility: Segment earnings during fourth quarter 2010 were $95 million or 56 cents per share, up from $70 million or 42 cents in the prior-year quarter.
2010 earnings were $438 million versus $380 million reported in 2009, reflecting a growth of 15.3%
Gas Utility:The earnings from this segment during the quarter under review were $35 million or 20 cents per share, which declined by $22 million from the prior-year quarter earnings. The fourth quarter 2009 included the impact of gain in sale of MichCon natural gas gathering and treating assets.
Earnings in 2010 were $107 million versus $80 million reported in 2009.
Gas Storage and Pipelines: Segment profit increased slightly by $3 million to $15 million or 9 cents per share from $12 million or 7 cents in the year-ago quarter.
2010 earnings from the segment were $51 million versus $49 million reported in 2009.
Unconventional Gas Production: Segment loss narrowed marginally to $2 million or 1 cent per share from a loss of $3 million or 2 cents per share in the fourth quarter of 2009.
Loss in 2010 from this segment aggravated by $2 million from the 2009 level of $9 million.
Power and Industrial Projects: The segment posted a profit of $19 million or 11 cents per share, down from $23 million or 14 cents in the year-ago period.
Segment earnings in 2010 grew by $50 million annually to $85 million.
Energy Trading: The segment posted a profit of $6 million or 4 cents per share, compared with a profit of $2 million or 1 cent per share in the prior-year quarter.
Earnings in 2010 reduced drastically by $69 million from $75 million generated in 2009.
Corporate and Other: Operating loss in the quarter was $19 million or 11 cents per share, compared with a loss of $41 million or 25 cents per share in the prior-year quarter.
Operating loss in 2010 was $69 million versus $67 million in 2009.
The net income of the company in 2010 was $607 million versus $543 million in 2009, reflecting a growth of 11.8%. The favorable year-over-year outcome was primarily due to better performance from its utility operations, which improved 18.5% year over year, partly countered by lackluster non-utility operations that deteriorated 12.7% year over year.
Quarterly Highlights
The company saw a slight year-over-year increase in total operating expenses during the quarter. However, as a percentage of total revenue, total expenses during the fourth quarter 2010 shrunk by 163 basis points over the prior year.
The positive impact of the relative decline in total expenses was reflected in the year-over-year growth in income from operations. Operating income during the reported quarter upped 14.1% to $350.0 million from $307.0 million in the fourth quarter of 2009.
Annual Highlights
Total operating expenses of DTE Energy in 2010 increased by 4.9% from the prior year. The year-over-year growth in expenses was mainly due to a 2.3% inflation in input costs and an 8.7% spike in operation and maintenance costs.
Interest charges during the year increased marginally to $549.0 million from $545.0 million in 2009 owing to slightly higher debt levels.
A Sneak Look into 2011
DTE Energy expects operating earnings per share for 2011 to come in a range of $3.40 to $3.70.
The company targets to achieve 5% to 6% growth in operating earnings over the long term, while providing attractive returns to its shareholders.
At the Peer
Wisconsin Energy Corporation (WEC), which competes with DTE Energy, announced its operating earnings for the fourth quarter 2010 of $1.06 per share versus 96 cents per share in the year-ago quarter. Wisconsin Energy surpassed the market expectation, booking earnings above the Zacks Consensus of $1.01 per share.
The 2010 operating earnings of the company were $3.84 per share compared with $3.19 per share reported in 2009. The results of the company exceeded the Zacks Consensus Estimate by a nickel.
Our View
DTE Energy currently retains a Zacks #4 Rank (short-term Sell rating). We provide a long-term Neutral rating on the stock.
Based in Detroit, Michigan, DTE Energy operates as an electric and natural gas utility company. The company is also involved in non-utility operations.
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