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How Long Will Exelon Earnings Keep Falling?

Dan Caplinger
July 29, 2013

Exelon (NYSE: EXC) will release its quarterly report on Wednesday, and investors are bracing themselves for what could be another disappointing report for the utility. Despite its promise as a major producer of nuclear power, Exelon earnings are likely to decline from their year-ago levels, continuing a troubling trend that has led to past dividend cuts and uncertainty about the company's future.

Historically, Exelon has benefited greatly from its diversified portfolio of electrical generation capacity, with its nuclear power plants helping to give it a major competitive advantage when fossil-fuel prices were high. Lately, though, low natural gas prices have taken away that advantage, creating problems for the utility's business model and depressing the price of the power it generates, hitting profits. Let's take an early look at what's been happening with Exelon over the past quarter and what we're likely to see in its quarterly report.

Stats on Exelon

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$6.15 billion

Change From Year-Ago Revenue


Earnings Beats in Past Four Quarters


Source: Yahoo! Finance.

When will Exelon earnings bottom out?
Analysts have largely kept their views on Exelon earnings stable in recent months, leaving June-quarter estimates unchanged though reining in their full-year 2013 views by $0.02 per share. The stock, though, has continued to pose problems for investors, having fallen 14% since late April.

A large part of that drop came in late May, following very poor results from power-grid operator PJM's auction of electrical capacity governing the 2016-2017 delivery year. With the grid operator managing to secure nearly 170 gigawatts of capacity at a price more than 55% below the previous year's auction, analysts downgraded Exelon and rival FirstEnergy (NYSE: FE) because of the adverse long-term implications on electricity demand. New natural-gas-fueled power plants were a major part of the capacity jump, and as gas prices continue to remain relatively low, producers like FirstEnergy and Exelon are facing profit squeezes well into the future.

But Exelon isn't giving up on the future prospects of nuclear energy. It filed renewal applications for two of its nuclear plants in May, seeking to get the multi-year process under way well before the 2024 to 2027 expiration dates of its curre