Dominion Resources, Inc. (D) suggested that its first quarter 2012 earnings per share will be impacted by warmer weather in its service territories. The surprisingly warm weather in Virginia and North Carolina, where the company operates, resulted in 26% lower heating degree days than usual.
The significant decline in the heating degree days lowered the demand for energy, and in turn impacted the company’s earnings per share. Dominion expects its first quarter results to be reduced by 10-11 cents due to warm weather.
However, Dominion maintained its first quarter as well as its full-year earnings guidance range of 85 cents to $1 and $3.10-$3.35 per share, respectively. The company expects its first quarter earnings per share at the lower end of its projection.
The Zacks Consensus expectation for the first quarter is 82 cents and $3.22 for the fiscal 2012. Our projection for the first quarter is lower than the guidance as we expect weather to have a larger impact than expected by the company.
Weather plays an important role in the functioning of the utility companies as its unpredictability often increases or decreases demand for energy. However, Dominion is in the receiving end and was affected by inconsistent weather in its service areas in the past six months.
The earnings per share of the company in the previous quarter was 58 cents, which was lower than our expectation as well as the year-ago results. The results were impacted by lower weather-related sales in the regulated electric service territory and lower merchant generation margins.
Richmond, Virginia based Dominion, together with its subsidiaries, engages in producing and transporting energy in the United States. The company primarily competes with American Electric Power Co. (AEP) and NiSource Inc. (NI).
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