Electric and Natural gas utility company Dominion Resources, Inc. (NYSE: D) will report its fourth quarter results on January 28, 2011. In the last three quarters of FY 2010, Dominion's reported EPS exceeded analysts' consensus estimates for quarters ended March 2010 and June 2010, by margins of 2.10 percent and 7.50 percent, respectively. For the quarter ended September 2010, the company's reported EPS missed analysts' consensus estimate by margin of 3.70 percent.
US-based Dominion Resources Inc. is one of the nation's largest producers and transporters of energy. Dominion's strategy is to be a leading provider of electricity, natural gas and related services to customers primarily in the eastern region of the U.S. Dominion is focused on expanding its investment in regulated electric generation, and regulated electric and natural gas transmission infrastructure within and around its existing footprint. As a result, regulated capital projects will continue to receive priority treatment in its spending plans. Dominion expects this will increase its earnings contribution from regulated operations, while reducing the sensitivity of its earnings to commodity prices. The company operates the natural gas storage system with 942 billion cubic feet of storage capacity and serves retail energy customers in 13 states. The company operates in three business segments: Dominion Virginia Power (DVP), Dominion Energy and Dominion Generation.
Q3 FY 2010 reported EPS missed analysts' consensus
For the third quarter FY 2010, Dominion reported revenues of $3.95 billion, up $320 million compared to revenues of $3.63 billion in the third quarter of FY 2009. On GAAP basis, the company reported earnings of $575 million, or $0.98 per share in the third quarter of FY 2010, compared to earnings of $594 million, or $1 per share, in the third quarter of FY 2009. The third quarter FY 2010 operating earnings were $603 million, or $1.03 per share compared to earnings of $590 million, or $0.99 per share in the third quarter of FY 2009.
Dominion Resources Raises Q4 and FY 2010 guidance
Dominion Resources has increased its fourth quarter guidance after the strong results reported in the third quarter. For the fourth quarter, the company expects operating earnings in the range of $0.59 per share to $0.69 per share, as compared to the fourth quarter FY 2009 operating earnings of $0.63 per share. The company also raised the range of its full FY 2010 operating earnings guidance to $3.30 - 3.40 per share, up from $3.25 - $3.40 per share. The operating earnings guidance of FY 2011 remains unchanged at $3 - $3.30 per share.
Dominion competitors include Alleghany Energy Inc. (NYSE: AYE), American Electric Power Co. Inc. (NYSE: AEP), and Nisource Inc. (NYSE: NI). In the last one year, Alleghany has reported earnings of $2.54 per share, on revenues of $3.90 billion. American Electric Power Co. has reported earnings of $2.66 per share, on revenues of $14.28 billion, and Nisource reported earnings of $1.26 per share, on revenues of $6.35 billion. On the other hand, Dominion Resources reported earnings of $4.21 per share, on revenues of $14.96 billion.
Dominion Resources Inc. has a P/E ratio of 10.35, which is lower than the industry's average P/E of 14.72. The P/S ratio of the company is 1.69, compared to industry's average P/S ratio of 1.47. The quarterly revenue growth of the company is 8.80 percent, compared to the industry's 9.90 percent.
Wall Street estimates meet Dominion's guidance
For the fourth quarter ending December 31, 2010, analysts' EPS estimates range from a low of $0.59 to a high of $0.70 per share, compared to the consensus estimate of $0.66 or $0.63 per share earned in year ago same quarter. Analysts' revenue estimates for the fourth quarter range from a low of $3.54 billion to a high of $4.15 billion, compared to a consensus estimate of $3.87 billion or $3.27 billion reported in the same quarter a year ago. For the quarter ended December 31, 2010, the consensus EPS forecast has been downgraded by analysts to the current estimate of $0.66 per share, from $0.67 per share estimated 30 days ago, which was further downgraded from $0.68 estimated 60 days ago.
The company does not have a publicly announced share repurchase program, however in FY 2009, the company repurchased 8,721 shares at an average price of $37.21 from employees to satisfy tax withholdings obligations on vested restricted stock. On October 22, 2010, the company declared its fourth quarter dividend of $0.4575 per share on its common stock. On January 21, 2011, the company increased its quarterly payout for the first quarter of FY 2011 to $0.4925 per share of its common stock, payable to share holders on March 20, 2011, to the shareholders of record on March 4, 2011. This is the 332nd consecutive dividend that Dominion or its predecessor company has paid holders of common stock.
In the last 52 weeks, Dominion's stock has been trading in the range of $36.12 and $45.12. In the last one year, Dominion's stock has gained 18 percent in value, to settle at $43.55 on January 26, 2011. After analyzing the company's financials, I set an EPS target for FY 2010 at $3.39 per share, and for FY 2011 at $3.20 per share. Based on the EPS estimates, I see a one year target price of $44.
