The Gory Details on Spectra Energy's Double Fumble

Spectra Energy (NYSE: SE  ) reported earnings on Nov. 1. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Spectra Energy missed estimates on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped and GAAP earnings per share shrank significantly.

Margins dropped across the board.

Revenue details
Spectra Energy logged revenue of $1.07 billion. The four analysts polled by S&P Capital IQ expected a top line of $1.15 billion on the same basis. GAAP reported sales were 4.5% lower than the prior-year quarter's $1.12 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.27. The 11 earnings estimates compiled by S&P Capital IQ predicted $0.32 per share. GAAP EPS of $0.27 for Q3 were 31% lower than the prior-year quarter's $0.39 per share. (The prior-year quarter included $0.01 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 30.6%, 2,460 basis points worse than the prior-year quarter. Operating margin was 30.6%, 130 basis points worse than the prior-year quarter. Net margin was 16.7%, 590 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.51 billion. On the bottom line, the average EPS estimate is $0.43.

Next year's average estimate for revenue is $5.28 billion. The average EPS estimate is $1.59.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 822 members out of 851 rating the stock outperform, and 29 members rating it underperform. Among 239 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 232 give Spectra Energy a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Spectra Energy is outperform, with an average price target of $31.42.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Spectra Energy. Motley Fool newsletter services recommend Spectra Energy. 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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