Duke Energy (NYSE:DUK) reported earnings this week and missed expectations on both the top and bottom lines. Hot off a major merger, this utility has disappointed analysts for three straight quarters. Let's dive deeper to see whether bad times are here to stay.

The numbers
Duke Energy's Q3 revenue came in $100 million lower than last year's third quarter at $6.71 billion. While that's a smaller dip than many utilities, it still came in far below analyst expectations.

On the bottom line, analysts had expected adjusted EPS of $1.51, but Duke Energy's earnings clocked in at $1.46. Here's how the company's quarter compares with TECO Energy (NYSE:TE), Exelon (NYSE:EXC), Dominion Resources (NYSE:D), and Southern (NYSE:SO).

Company

Q3 Revenue (Billions)

Y/Y Change (%)

Q3 Adjusted EPS

Y/Y Change (%)

Duke Energy

$6.7

0%

$1.46

(0.7%)

Dominion Resources

$3.4

3%

$1.00

8.7%

Exelon

$6.5

(1.2%)

$0.78

1.3%

TECO Energy

$0.77

(10.8%)

$0.30

(28.6%)

Southern

$5.0

(0.6%)

$1.08

(2.7%)

Source: Company earnings reports. 

TECO Energy takes the cake on a tough quarter, while Exelon and Southern are both stuck in the red. But while Southern disappointed analysts, low predictions for Exelon left investors pleasantly surprised.

Beyond the numbers
Duke Energy underwent a major merger last year to become the country's largest electric utility by customers and market value, and that new size may come with some growing pains.

From a purely financial perspective, share dilution knocked $0.02 off this report. The utility is also reorienting its strategy to, in the words of CEO Lynn Good, position her company as a "low-risk, highly regulated utility, operating in constructive regulatory environments." 

The utility made major improvements on a variety of regulatory approvals across the nation, adding a sizable $0.16 to this quarter's earnings. But with new size comes new demand, and the company is embarking on a variety of projects to keep power pumping.

The retirement of a faulty Florida nuclear plant has Duke Energy in the market for a 1,640 MW combined cycle plant, which it hopes to have online by 2018. There's also a 750 MW combined cycle plant in South Carolina in the works, as well as a potential 10% stake in a new nuclear plant in the same area. While Exelon is hedging its bets against nuclear and Southern's investing in clean coal, Duke Energy is attempting its own balancing act between coal, natural gas, and some nuclear.

Is Duke a dynamite dividend?
At current rates, Duke's 4.3% dividend yield ties with Exelon's 4.3% yield and beats out Dominion's 3.5%, but it comes up short of Southern's 4.9% and TECO Energy's 5.1%.

But the company has steadily increased its distribution since a dip in 2007, and CFO Steven Young might've hinted at a bigger boost in the future when he told investors:

Over the past several years, we have been growing the dividend annually at about 2%, which is a rate slower than our overall earnings growth. We continue to target a payout ratio of 65% to 70% based upon adjusted diluted earnings per share. Ultimately, the dividend is at the discretion of the Board. We believe we have flexibility to grow the dividend at a pace more consistent with earnings growth once we are within this targeted payout ratio.

The utility's priced at a premium to competitors, and this latest earnings report doesn't seem to have slowed its stock price rise. For income investors who want a steady payout, now is as good a time as any to grab some shares. But for those looking for more upside (with inherently more risk), there are better dividend options out there than the biggest utility around.

Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and Motley Fool CAPS, @TMFJLo.

The Motley Fool recommends Dominion Resources, Exelon, and Southern. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.