Cleco Earnings Preview

Cleco (NYSE: CNL  ) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings on Wednesday. Cleco is an energy services holding company that conducts business through its two segments: Cleco Power, which is an electric utility services subsidiary, and Midstream, which owns and operates a merchant generation station.

What analysts say:

• Buy, sell, or hold?: Half of analysts think investors should stand pat on Cleco while the remaining half rate the stock as a buy half of analysts think investors should stand pat on Cleco. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $354.2 million in revenue this quarter. That would represent a rise of 1.1% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $1 per share. Estimates range from $0.97 to $1.02.

What our community says:
CAPS All-Stars are solidly behind the stock with 93.3% granting it an outperform rating. The community at large agrees with the All-Stars with 91.6% assigning it a rating of outperform. Fools are gung-ho about Cleco, though the message boards have been quiet lately with only 24 posts in the past 30 days. Cleco has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Cleco's profit has risen year over year by an average of 15.9% over the past five quarters. Revenue has fallen in the past two quarters. The company's gross margin shrank by 2.9 percentage points in the last quarter. Revenue fell 1.1% while cost of sales rose 3.9% to $163.7 million from a year earlier.

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	40.0%	40.9%	37.9%	40.1%
Net Margin	25.8%	11.4%	8.0%	14.4%

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