Will Duke Energy's Q3 Results Lag Estimates?

(RTTNews) - Electricity provider Duke Energy Corp. (DUK) is due to release its third-quarter numbers before the bell this Thursday, November 4. The company is expected to report earnings of $1.52 per share on revenue of $6.87 billion for the quarter, according to analysts compiled by Thomson Reuters.

In the preceding second quarter, the company reported lower-than-expected results, largely due to one-time tax items that did not recur in the current year. Results also were affected by continued weakness in the International business, particularly Brazil, and the timing of O&M expenses at Regulated Utilities.

The company expects continued growth in contracted wholesale volumes, as well as organic growth in retail demand over the last half of the year. Duke Energy experienced unfavorable weather last year in the third quarter. Assuming normal weather for the remainder of this year, the company sees an uplift of $0.05.

The early completion of the NCEMPA asset purchase will provide an additional earnings per share impact of around $0.04. Earnings from the company's Commercial renewables business is also expected to see an improvement in the second half of the year. The company said it is on track to put over 200 megawatts of additional wind and solar capacity into service later this year, which would bring 2015's total additions to more than 400 megawatts.

Duke Energy said it remains on track to achieve its 2015 adjusted earnings guidance range of $4.55 - $4.75 per share. Analysts are currently looking for earnings of $4.63 per share.

During the second-quarter earnings call, the company said it is encouraged by the continued strengthening of the economy, particularly in the Southeast. It remains on track to achieve its full-year 2015 weather normalized load growth of between 0.5% and 1%. Also, the company targets earnings per share growth of 4% - 6% through 2017, underpinned by the strength of its domestic business.

Meanwhile, the company has to grapple with the ongoing drought conditions in Brazil. Due to a weakening economy and voluntary conservation efforts, growth in demand for electricity in Brazil is expected be lower in 2015. These ongoing challenges in Brazil are expected to confine the company's International earnings.

Q2 Results

The company's second-quarter attributable net income fell to $543 million from $609 million reported last year. Earnings per share declined to $0.78 from $0.86 in the second quarter of 2014.

Adjusted earnings per share was $0.95, compared to $1.11 last year. On average, 14 analysts polled by Thomson Reuters expected earnings of $0.99 per share. Analysts' estimates typically exclude certain special items.

Total operating revenues slid to $5.589 billion from $5.708 billion in the previous year. Analysts expected revenues of $5.78 billion.

Recent Happenings

The company has been diversifying and expanding its natural gas infrastructure amid weakening demand for electricity.

October 22, Duke Energy announced the acquisition of a majority share of Phoenix Energy Technologies, a provider of energy management systems and services for commercial customers. Terms of the deal remains undisclosed.

Last month, the company also acquired Piedmont for about $4.9 billion in cash. Duke Energy said it will assume about $1.8 billion in Piedmont's existing net debt, with the deal representing a total enterprise value of about $6.7 billion. The transaction, which requires approval by Piedmont shareholders, is expected to be completed by the end of 2016. The acquisition of Piedmont will provide Duke Energy with a growing natural gas platform.