Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Exelon: Q3 Earnings Beat, Profits Still Bleak

By Taylor Muckerman and Joel South - Nov 2, 2012 at 11:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Exelon continues to see revenue increases but profits are still lagging.

Is the low cost of natural gas what prompted utility companies to switch from coal to the recently abundant alternative? Weren't these lower input costs supposed to help utilities become more profitable? Unfortunately, as of late, input costs have been keeping the market price of electricity at a point that has begun to squeeze the margins for these power providers.

Exelon ( EXC -0.34% ) is the nation's largest provider of electricity generated by nuclear reactors. It is also the second-largest utility in the nation by customer base, behind Duke Energy ( DUK 2.28% ), after completing its merger with Constellation in March of this year. It is this merger to which management attributes much of the success for increasing revenue for the second straight quarter. However, much to the chagrin of investors, Exelon's generation business continues to be squeezed by tighter margins.

Every quarter this year has seen a reduction in profits with little end in sight. Until the price of natural gas rises, companies in the sector are likely to continue feeling the pinch. Exelon's CEO believes that if natural gas prices rose above $6, Exelon would increase its gross margin by $1.9 billion. With this outlook, the future appears bright, but only if the supply and demand for natural gas start to align more evenly.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Exelon Corporation Stock Quote
Exelon Corporation
EXC
$52.74 (-0.34%) $0.18
Duke Energy Corporation Stock Quote
Duke Energy Corporation
DUK
$99.88 (2.28%) $2.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.