Permit me to begin with a question: Don't you find it moderately absurd when management teams release strong earnings and then congratulate themselves on beating their own guidance?
That's what Constellation Energy (NYSE: CEG) did in midweek when it reported per-share earnings that "exceeded the top of management's guidance range." Sure, it was a good quarter for the company, with adjusted earnings of $1.03 per share, versus $0.61 a share in the year-earlier quarter. That topped a wide guidance range of $0.80 to $1.00. But why not set guidance at $0.40 to $0.50 and then really ballyhoo a doubling of the top end of that guidance?
OK, enough of my diatribe. Constellation is a good company, and it did have a great quarter. On a GAAP basis, without excluding the effects of a host of special items -- as is the case with adjusted earnings -- the company earned $195.7 million, or $1.07 per share, an impressive 72% above the $113.9 million, and $0.63 a share, it posted a year ago.
Baltimore-based Constellation provides natural gas and electricity to a host of wholesale, retail, commercial, industrial, and government customers. It also owns and operates fossil, nuclear, and hydroelectric generating facilities and provides structured transactions and risk-management services. Probably its best-known unit is the Baltimore Gas & Electric utility.
In announcing his company's results, Mayo A. Shattuck III, Constellation's chairman, president, and chief executive officer, said:
The first quarter of 2007 was marked by solid earnings growth in the Merchant businesses. Our Mid-Atlantic Fleet is returning to profitability as below-market hedges roll off. Constellation NewEnergy performed well as we continue to leverage its national platform. Our wholesale competitive supply business executed in line with its plan and delivered solid results.
Constellation's peers generally include such companies as Dominion Resources (NYSE: D), Duke Energy (NYSE: DUK), PG&E (NYSE: PCG), and Exelon (NYSE: EXC), the last of which on Thursday reported superb results of its own.
Constellation is also characterized by happy stockholders, who have watched its share price climb 73% in the past year. Fools looking for solidly run, generally non-cyclical companies might be urged to carefully scope out this Constellation.
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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Fool has a disclosure policy.
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