Xcel Energy Second Quarter Earnings Preview

A strong second quarter earnings announcement could push shares of Xcel Energy (NYSE:XEL) up from 7 cents short of its 52-week high to set a new high.



Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: Xcel is expected to report 35 cents per share, up 6.1% from a year ago when the company reported earnings of 33 cents per share.

This is an increase from 34 cents three months ago. Analysts are projecting earnings of $1.78 per share for the fiscal year.

Xcel is expected to report revenue of $2.5 billion for the quarter, beating last year's figure of $2.44 billion by 2.5%. The anticipated revenue for the fiscal year is $10.87 billion.



Company Performance: In the first quarter, Xcel broke a three-quarter growth streak with a year-over-year decline in revenue. After rising 0.1%in the fourth quarter of the last fiscal year, 7.7% in the third quarter of the last fiscal year and 5.7% in the second quarter of the last fiscal year, it fell 8.5% in the most recent quarter.

XEL has a P/E ratio of 17.4, high compared to the industry average of 10.67. This could mean that the market is expecting big things over the next few months or years. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Can Investors Trust the P/E Ratio?



The stock price has increased from $27.06 on May 1, 2012 to $29.45 over the past quarter. Xcel's best recent streak was when its price gained $1.77 per share between May 17, 2012 and June 18, 2012.





The Competition: Xcel Energy is a holding company that is engaged in the generation, purchase, transmission, distribution and sale of electricity and natural gas The company's closest competitor in the electric utilities industry, Duke Energy (DUK), will report earnings on August 2, 2012. Analysts are expecting earnings of 95 cents per share for Duke Energy, down 4% from last year's earnings of 99 cents per share. Analysts are less optimistic about Xcel than about Duke Energy. One out of 16 analysts rate the latter a buy compared to six of 16 for the former.