Duke Posts A Mixed Quarter; Expects To Grow Its EPS By 4%-6% Until 2022

by Trefis Team
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Duke Energy (NYSE:DUK), one of the largest utility companies in the US, released a mixed set of financial numbers for the December quarter and full year 2017((Duke Energy Announces December Quarter Results, 20th February 2018, Duke Website)). While the company’s revenue improved due to a steady rise in its customer base backed by the stronger economic activity during the quarter, it missed the analyst estimate by a small margin. However, the utility company exceeded the earnings expectations for both the quarter as well as full year 2017.

Going forward, Duke expects its adjusted EPS for 2018 to be in the range of $4.55 and $4.85 per share, and aims to grow its earnings at a steady rate of 4%-6% until 2022, backed by its continuous and regulated investments and attractive service offerings in key regions. We have a price estimate of $84 per share for Duke, which is close to its current market price. We will be updating our model shortly to reflect the company’s actual numbers and guidance going forward.

Below are the key takeaways from Duke’s 4Q’17 earnings report using our interactive platform:

  • Duke’s Electric Utilities and Infrastructure 2017 earnings improved to $3.2 billion from $3 billion in 2016, due to lower operational and maintenance expenses driven by ongoing cost management and higher customers, which was partially offset by lower units of power sold during the year.
  • The company’s Gas Utilities and Infrastructure revenue almost doubled to $1.8 billion during the year driven by customer growth and increased integrity management investments at Piedmont. Further, the division’s earnings also rose significantly to $319 million due to higher earnings from increased investment in the Atlantic Coast Pipeline.
  • Duke’s Commercial Renewables division made notable earnings of $441 million in 2017, compared to merely $23 million primarily due to a new wind project brought on-line in late 2016 and improved wind resources.

Going forward

  • Duke expects its 2018 adjusted earnings per share to be in the range of $4.55 to $4.85 per share, including the estimated impact of the Tax Act, driven by its cost reduction measures. Beyond 2018, the company aims to maintain an earnings growth rate of 4%-6% on 2017 adjusted earnings until 2022 backed by its continuous and regulated investments and attractive service areas.
  • Duke foresees positive trends in the US employment and wage markets to result in a continued recovery in the housing market, which will, in turn, drive the company’s residential growth. The single-family building permits in Florida, the Carolinas, and Tennessee remain strong and are outpacing multi-family home starts, which is likely to be beneficial for Duke.

Don’t agree with our forecast? Create your own forecasts for Duke Energy and its performance going forward using our interactive platform.


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