DTE Energy Company’s (DTE) fourth-quarter operating earnings came in at 72 cents per share, 15 cents less than the earnings in the prior-year quarter. The company however beat the Zacks Consensus EPS estimate of 71 cents by a penny in the reported quarter.
The variance in EPS primarily resulted from lower sales volumes due to the economy and weather, coupled with the timing of maintenance activities and higher benefit expenses. In fiscal 2009, the company clocked an operating EPS of $3.30 in line with the Zacks Consensus Estimate, compared to an EPS of $2.89 in fiscal 2008.
Earnings Revisions & Surprise Trend
With respect to earnings surprises, the stock has fluctuated substantially over the last four quarters, with two positive and two negative surprises. However, the average remained positive at 72.11%, reflecting the utility’s stable performance during this period. This implies that DTE Energy has beaten the Zacks Consensus Estimate by 72.11% over the last four quarters.
Looking ahead, the current Zacks Consensus Estimate for the first quarter of 2010 is $1.14, which has seen no estimate revisions in either direction over the last 30 days. As of now, our short-term recommendation on the stock is Buy (Zacks Rank #2), meaning that DTE Energy is expected to outperform relative to the overall market during the next 1−3 months.
Operational Results
DTE Energy’s revenue in the reported quarter fell marginally by $49 million to $2.1 billion. However fiscal 2009 revenues witnessed a slide to $8 billion from $9.3 billion in fiscal 2008.
Segment Results
Electric Utility – Operating earnings were $2.30 per share in fiscal 2009 compared to $2.03 in fiscal 2008. The increase in operating earnings was driven by rate increases and operation and maintenance cost reductions, partially offset by lower sales volumes due to a weaker economy, cooler weather and higher benefit expenses.
Gas Utility – Operating earnings were $0.49 per share in fiscal 2009 compared with $0.55 in fiscal 2008. The year-over-year variance is primarily due to higher gas theft and customer conservation, partially offset by lower operation and maintenance expenses.
Gas Storage and Pipelines – Operating earnings were $0.30 per share in fiscal 2009 compared with fiscal 2008 operating earnings of $0.23. The increase in earnings is due to increased storage capacity and higher storage rates as well as the Millennium pipeline being commissioned in Dec 2008.
Unconventional Gas Production – This segment had an operating loss of $0.05 per share in fiscal 2009 compared with operating earnings of $0.05 in fiscal 2008. Lower natural gas prices primarily played spoilsport in fiscal 2009.
Power and Industrial Projects – Operating earnings were $0.22 per share in fiscal 2009 compared to fiscal 2008 operating earnings of $0.26 primarily due to lower coke sales resulting from the downturn in the steel industry in the first half of fiscal 2009.
Energy Trading – Operating earnings for this segment were $0.46 per share in fiscal 2009 compared with $0.27 in fiscal 2008. The primary driver of this increase in earnings was higher realized gains in gas trading in fiscal 2009.
Corporate and Other – This segment had an operating loss of $0.42 per share versus an operating loss of $0.50 in 2008. The year-over-year variance is driven primarily by one-time tax savings in 2009, partially offset by contributions to the DTE Energy Foundation and a realignment of employee benefit costs.
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