Analysts are expecting a drop in profit for Exelon (NYSE:EXC) when it reports its results for the third quarter on Wednesday, October 31, 2012. The company reported profit of $1.12 a year ago, but the current consensus estimate anticipates earnings per share of 72 cents.
Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: 12 Things You Need To Know About Financial Statements
What to Expect: Exelon is expected to report earnings of 72 cents per share, down 35.7% from a year ago, when the company reported earnings of $1.12 per share.
The consensus estimate has fallen over the past month, down from 73 cents, while still up from the consensus estimate of 70 cents three months ago. Analysts are projecting earnings of $2.75 per share for the fiscal year.
Exelon is expected to report revenue of $7.99 billion for the quarter, beating last year's figure of $5.29 billion by 50.9%. Exelon is expected to report revenue of $25.94 billion for the fiscal year.
Company Performance: In the second quarter, revenue increased year-year-over to snap a two-quarter declining streak. In the second quarter, it rose 29.8% and fell 7.2% in the first quarter and 11.2% in the fourth quarter of the last fiscal year.
EXC has a P/E ratio of 14.8, high compared to the industry average of 13.08. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock
Since July 30, 2012, the stock price has fallen 9.7% to $35.64 from $39.49. Exelon's stock price is on a downward streak. The share price has fallen $1.84 since October 18, 2012.
The Competition: Exelon is a utility services holding company that distributes electricity and natural gas and is a major nuclear operator. Analysts generally consider Exelon a hold, with 14 of 18 analysts rating it as such. Buy ratings have increased slightly over the last three months.
The company's closest competitor in the electric utilities industry is NextEra Energy (NEE). Analysts are less optimistic about Exelon than about NextEra Energy. Thirteen out of 19 analysts rate the latter a buy compared to three of 18 for the former.