Vectren Earnings Preview

Investors braced for a bumpy ride ahead of Vectren's (NYS: VVC) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Friday, Nov. 4. Vectren is an energy holding company, which, through its subsidiaries, provides gas and electricity to customers in adjoining service territories that cover nearly two-thirds of Indiana and west central Ohio.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Vectren with five of six analysts rating it hold. Analysts don't like Vectren as much as competitor Piedmont Natural Gas Company overall. One out of seven analysts rate Piedmont Natural Gas Company a buy compared to zero of six for Vectren. That rating hasn't budged in three months as analysts have remained steady in their opinion of the stock.
  • Revenue Forecasts: On average, analysts predict $425.8 million in revenue this quarter. That would represent a rise of 0.7% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.32 per share. Estimates range from $0.26 to $0.40.

What our community says:
CAPS All-Stars are solidly behind the stock with 91.7% granting it an "outperform" rating. The community at large agrees with the All-Stars with 95.1% awarding it a rating of "outperform." Fools are gung-ho about Vectren, though the message boards have been quiet lately with only 26 posts in the past 30 days. Vectren has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Vectren's profit has risen year over year by an average of 14.9% over the past five quarters. A year-over-year revenue increase last quarter snaps a streak of two consecutive quarters of revenue declines. Revenue rose 18.2% in the second quarter and fell 7.8% in the first quarter and 0.8% in the fourth quarter of the last fiscal year.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

28.4%

26.6%

29%

30.3%

Net Margin

3.2%

6.5%

8.0%

3.9%

One final thing: If you want to keep tabs on Vectren movements, and for more analysis on the company, make sure you add it to your Watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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