Constellation Tops Zacks Forecast

Constellation Energy Group Inc. (CEG: 34.15 0.00 0.00%) topped the Zacks Consensus earnings per share (EPS) estimate of 25 cents by 5 cents in the fourth quarter of fiscal 2009. The company also surpassed the year-ago quarterly EPS of 3 cents by a massive margin of 27 cents.

The upside was fueled by improvement in cost structure. The uptrend was reflected in fiscal 2009 results as well, where the EPS of $3.36 breezed past the Zacks Consensus Estimate of $3.31. However, results in the reported fiscal year were lower compared to fiscal 2008 EPS of $3.57.

Estimate Revisions Trend

Constellation Energy has witnessed two upward revisions in earnings estimates from the 9 analysts covering the stock in fiscal 2010 over the last 30 days. Constellation Energy expects its fiscal 2010 earnings in the range of $3.05 – $3.45, in line with the Zacks Consensus Estimate of $3.37.

The consensus has yet to reflect the effects of stable fiscal 2009 results. The average surprise over the last 4 quarters remained negative at 7.55%. This implies that Constellation Energy has fallen short of the Zacks Consensus Estimate by 7.55% on an average over the last 4 quarters.

Operational Performance

Total revenues decreased 29.8% to $3.4 billion in the reported quarter from $4.9 billion in the prior-year quarter. Of this, non-regulated revenues fell 31.5% year-over-year to $2.7 billion, regulated electric revenues fell 18.5% to $569.9 million and regulated gas revenues nosedived 35.6% to $180.7 million.

At Baltimore Gas and Electric Company, adjusted EPS was 18 cents, down 21.7% compared to 23 cents in the prior-year quarter. This decline was mainly due to dilutive issuances of common stock in the recent past.

The Merchant business recorded adjusted earnings of 12 cents per share in the reported quarter, compared to a loss of 22 cents in the year-ago quarter. The significant variance in year-over-year numbers came from the reduction in risk capital deployed to support the marketing and trading operations and the sale of non-core businesses.

Financial Condition

Constellation Energy reported $3.4 billion of cash and cash equivalents at fiscal-end 2009 from $202.2 million at fiscal-end 2008. Long-term debt fell to $4.8 billion, compared to $5.1 billion at fiscal-end 2008.