Utility ETFs Gain Despite Mixed Q4 Earnings

The utility sector has come up with mixed results so far this earnings season. Of the 32.1% S&P companies in the utilities sector that have reported, 66.7% beat on the bottom-line estimates, while none of these surpassed revenue estimates. Earnings have risen 63.8% and revenues have declined 0.1% year over year, per the Earnings Trends issued on Feb 12. 

Notably, the utility sector is a great investment area for those seeking yields and safety. It is known for its non-cyclical nature and acts as a safe haven for investors during choppy stock-market conditions. Moreover, utilities act as a defensive option to stay invested in more rewarding equity markets. However, this should be avoided by those eyeing market-beating returns. Of late, China has been grappling with the coronavirus outbreak that has already claimed at least 1,488 lives in the nation, along with around 65,000 confirmed cases. The heightening tensions are causing investors to seek refuge in safer investment options, with the utility sector grabbing major attention.

Against this backdrop, we take a look at some big industrial earnings releases and see if these can leave an impact on ETFs exposed to the space.

Inside the Earnings Results

On Jan 24, NextEra Energy (NEE - Free Report) reported fourth-quarter 2019 adjusted earnings of $1.44 per share, lagging the Zacks Consensus Estimate of $1.54 by 6.5%. Moreover, earnings declined 3.4% on a year-over-year basis. In the quarter, operating revenues totaled $4.59 billion, missing the Zacks Consensus Estimate of $4.79 billion by 4.3%. However, revenues improved 4.5% year over year.

The company reiterated its long-term earnings growth guidance. Its earnings are expected to witness a compound annual rate of 6-8% per year through 2021, off its base of $7.70 in 2018. NextEra Energy expects 2022 adjusted earnings per share in the range of $10-$10.75, indicating 6-8% growth from the 2021 EPS. NextEra currently aims to add 11,500-18,500 MW of renewable power projects to its portfolio within the 2019-2022 time frame.

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