Fiscal 2012 First-Quarter

On May 8, NV Energy reported fiscal first-quarter 2012 earnings of 5 cents per share, beating both the Zacks Consensus Estimate of 3 cents and the year-ago earnings of a penny. Despite a lower top-line, the robust quarterly performance was driven by higher gross margins, a lower fuel cost and increased customer count. Operating income rose 30.6% year over year to $96.5 million.

Net sales, however, went down 4.6% year over year to $611.4 million. The top-line also missed the Zacks Consensus Estimate of $611 million by 7.6%.

On the other hand, NV Energy affirmed fiscal 2012 earnings per share in the range $1.15 to $1.25, which represents year-over-year growth of 55.4% to 68.9%.

Estimates Surge

Estimates for NV Energy have inched upward in the last 60 days. The Zacks Consensus Estimate for fiscal 2012 increased 3.5% to $1.20, indicating a year-over-year growth of 61.7%. The bullishness about earnings growth going forward is based upon expected volume growth, falling interest overhead, and the inclusion of the Harry Allen combined cycle natural gas plant in rate base.

Boosted by the planned merger of its two regulated subsidiaries in 2013 (Nevada Power Company and Sierra Pacific Power Company),the estimate for fiscal 2013 has increased 4.2% over the same timeframe to $1.25 per share, representing a projected year-over-year growth of nearly 4.5%.

Dividend Portraying Strength

NV Energy last raised its quarterly dividend in May 2012 by 31% to 17 cents per share. Stable cash flow and fewer capital expansion plans would free up substantial funds for dividends going forward. This leaves room for further upside. Management also expects to dish out approximately 55% – 65% of future earnings as dividends. The company has been paying regular incremental dividends since 2007, currently yielding a strong 3.9%. This is more than twice the current yield on the 10-year Treasury Notes.

Stable Valuation Continued...