Duke Energy Misses Q3 Earnings Expectations, Storm Costs Weigh on Results

Duke Energy Falls Short of Q3 Earnings Expectations, Storm Costs Weigh on Results

Duke Energy Corporation (DUK) reported a disappointing third-quarter earnings performance, with adjusted earnings per share (EPS) coming in at $1.62, falling short of analysts’ expectations of $1.70. This figure also represents a decline from the $1.94 reported in the same period last year. While revenue surpassed estimates, reaching $8.154 billion compared to the consensus of $8.058 billion, the company faced significant challenges.

Storm Costs and Rising Expenses Impact Performance

The primary contributor to the decline in earnings was a surge in operational and maintenance (O&M) expenses, primarily driven by storm-related costs. Hurricane Helene, Debby, and Milton, which impacted Duke Energy’s operations, resulted in projected total restoration costs, including capital expenditures, of $2.4 billion to $2.9 billion. These costs are expected to be recognized over the third and fourth quarters of 2024, primarily affecting Duke Energy Carolinas, Duke Energy Progress, and Duke Energy Florida.

The company’s Electric Utilities and Infrastructure segment also witnessed a decrease in adjusted segment income, dropping to $1.464 billion from $1.531 billion in the same period last year. Contributing factors to this decline included higher depreciation from an expanding asset base and rising interest expenses.

The Gas Utilities and Infrastructure segment faced more challenging conditions, reporting an adjusted loss of $22 million, in contrast to an adjusted segment income of $15 million in the third quarter of 2023.

Outlook Remains Positive Despite Q3 Challenges

Despite the impact of storms and rising costs, Duke Energy reaffirmed its full-year 2024 adjusted EPS outlook of $5.85 to $6.10, aligning with the consensus estimate of $5.98. The company also reiterated its long-term adjusted EPS growth target of 5%-7% through 2028, reflecting confidence in its future prospects.

Key Highlights and Financial Data

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Adjusted EPS:

$1.62 (down from $1.94 in Q3 2023)
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Revenue:

$8.154 billion (above consensus of $8.058 billion)
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Operating Cash Flow:

$8.95 billion
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Cash and Equivalents:

$447 million

Investing in Duke Energy

Investors interested in gaining exposure to Duke Energy can consider the SPDR Select Sector Fund – Utilities (XLU) or the Fidelity MSCI Utilities Index ETF (FUTY).

Market Reaction

Following the earnings announcement, DUK shares experienced a decline of 1.33%, trading at $112.12 at the last check on Thursday.