Core Viewpoint - Friedrich Global Research aims to identify the safest and best-performing companies for stock investments by focusing on free cash flow, efficient capital allocation, and consistently superior results to pinpoint high-quality management teams [1] Group 1: Company Analysis - The analysis emphasizes the importance of free cash flow and efficient capital allocation as key indicators of a company's performance [1] - The focus is on identifying management teams that consistently deliver superior results, which is crucial for long-term investment success [1] Group 2: Analyst Background - The founder of Bern Factor LLC has nearly 40 years of investing and analysis experience, with a background as a CPA and CFA charter holder [2] - The analyst possesses expertise in both quantitative and qualitative analysis, along with extensive experience in technical analysis [2] - A diverse career background, including roles in retail, military service, and management across various sectors, contributes to a broad perspective on macroeconomics and detailed operational insights [2]

Core Viewpoint - The utility sector is poised for significant growth due to a surge in electricity demand driven by advancements in artificial intelligence, data centers, and electric vehicles, with a projected increase in demand of 55% over the next 20 years compared to just 9% from 2000 to 2020 [3][4]. Industry Trends - Electricity demand grew by 9% from 2000 to 2020, but is expected to grow by 55% over the next two decades [3]. - The demand for electricity from AI and data centers is projected to increase by 300% in the next decade, while electric vehicles are expected to drive a staggering 9,000% increase in electricity demand by 2050 [4]. - By the middle of the century, electricity is projected to account for 32% of final energy demand, up from 21% [4]. Investment Opportunities - Vanguard Utilities Index Fund ETF (VPU) offers diversified exposure to the utility sector with a yield of approximately 2.8% [6]. - NextEra Energy (NEE) has a strong growth platform with a 10% annualized dividend increase over the past decade and a yield of around 3.2% [7][8]. - The Southern Company (SO) has recently started two nuclear reactors, enhancing its clean energy supply and yielding 3.2% [9]. - Duke Energy (DUK) focuses on regulated utility customer bases, with a dividend yield of about 3.5% [10]. - Dominion Energy (D) has a higher yield of 4.7% but has faced challenges with a dividend cut [11]. - Black Hills Corporation (BKH) has achieved Dividend King status with a yield of 4.8% and a growing customer base [12]. - Constellation Energy (CEG) operates the largest nuclear power fleet in the U.S. but has a lower yield of 0.5% [13]. - Brookfield Renewable offers a diversified clean energy investment with yields of 5.8% for the partnership class and 4.5% for the corporate class [14][15]. - Portland General Electric (POR) has a yield of 5.1% and operates in a region with potential for data centers despite wildfire risks [17]. - Eversource Energy (ES) focuses on regulated utility assets with a yield of approximately 4.7% [18]. Long-term Outlook - The trends driving electricity demand are expected to unfold over decades, presenting opportunities for long-term investors to build wealth as the demand growth story develops [19].

Group 1 - Zacks Premium offers various tools for investors, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens to enhance investment confidence [1][2] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market within 30 days, rated from A to F based on value, growth, and momentum characteristics [2][3] Group 2 - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales to highlight attractive investment opportunities [3] - The Growth Score assesses a company's financial health and future outlook by analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth potential [4] - The Momentum Score identifies optimal times to invest based on price trends and earnings estimate changes, emphasizing the importance of market trends [5] Group 3 - The VGM Score combines all three Style Scores, providing a comprehensive indicator that evaluates stocks based on value, growth, and momentum, assisting in narrowing down investment choices [6] - The Zacks Rank utilizes earnings estimate revisions to help investors build successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +25.41% since 1988, significantly outperforming the S&P 500 [7][8] Group 4 - Eversource Energy, trading under the ticker symbol "ES," operates in the energy delivery sector, providing electricity and natural gas to customers in Connecticut, New Hampshire, and Massachusetts [12] - Eversource Energy holds a 3 (Hold) Zacks Rank with a VGM Score of B, indicating potential for growth, with a forecasted year-over-year earnings growth of 3.5% for the current fiscal year [13][14]

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Core Insights - Eversource Energy is making significant capital investments to enhance its transmission and distribution infrastructure, which will improve service reliability and support its renewable operations [1][2] Group 1: Capital Investments - The company plans to invest $24.2 billion from 2025 to 2029, with approximately $16.2 billion allocated for electric and natural gas distribution networks and $6.8 billion for electric transmission [3][8] - Specific investments include nearly $2 billion for replacing aging infrastructure, $1.5 billion for the cable underground program, $1 billion for substation development, and $0.5 billion for clean energy initiatives through 2028 [3][8] - Eversource is leading energy transition efforts in New England, with nearly $2 billion in transmission and distribution investments in Massachusetts aimed at achieving clean energy goals [4] Group 2: Operational Challenges - The company relies on third-party suppliers for certain business functions, which poses risks if these parties underperform, potentially impacting the company's reputation and operational results [5] - Eversource's operations are subject to various federal, state, and local regulations, including environmental laws related to greenhouse gas emissions and pollution, which could affect financial performance if regulations change [6] Group 3: Stock Performance - Over the past three months, Eversource's stock has increased by 10.1%, outperforming the industry average growth of 7.2% [7]

I am optimistic about Eversource Energy (NYSE: ES ), driven by a projected 2% increase in electricity generation in 2025 and 1% in 2026. Overall, the average electricity consumption is expected to increase by First Principles Partners is an equity research analyst specializing in technology, innovation, and sustainability investment. My unique approach, "First Principles," involves breaking down complex problems to their most basic elements in terms of financial and technology, enabling me to uncover overlo ...

Financial Performance - Eversource earned $550.8 million, or $1.50 per share, in Q1 2025, compared to $521.8 million, or $1.49 per share, in Q1 2024, reflecting a slight increase in earnings per share [185]. - The company reaffirmed its 2025 earnings guidance range of $4.67 to $4.82 per share and projected a long-term EPS growth rate of 5% to 7% through 2029, using 2024 non-GAAP EPS of $4.57 as the base year [185]. - Eversource reported operating revenues of $4,118.4 million for Q1 2025, an increase of $785.8 million (23.6%) compared to $3,332.6 million in Q1 2024 [243]. - Net income attributable to common shareholders for Q1 2025 was $550.8 million, a rise of $29.0 million (5.6%) compared to $521.8 million in Q1 2024 [243]. - Operating income increased to $926.4 million in Q1 2025, reflecting an increase of $80.4 million (9.5%) from $846.0 million in Q1 2024 [243]. Cash Flow and Debt Management - Cash flows from operating activities totaled $1.04 billion in Q1 2025, significantly higher than $291.3 million in Q1 2024 [185]. - Eversource issued $1.20 billion of new long-term debt in Q1 2025 and repaid $300 million of long-term debt [185]. - As of March 31, 2025, Eversource Parent's commercial paper borrowings outstanding were $1,381.6 million, down from $1,538.0 million as of December 31, 2024, with available borrowing capacity increasing to $618.4 million from $462.0 million [200]. - Eversource's cash and cash equivalents increased to $111.4 million as of March 31, 2025, compared to $26.7 million as of December 31, 2024 [197]. Investments and Capital Expenditures - Eversource's total investments in property, plant, and equipment were $1.01 billion in Q1 2025, down from $1.15 billion in Q1 2024 [185]. - Eversource's total capital expenditures in Q1 2025 were $1.04 billion, slightly down from $1.09 billion in Q1 2024, with investments primarily focused on infrastructure improvements [213]. - The Greater Cambridge Energy Program, with a total project cost of approximately $1.84 billion, aims to enhance the resiliency of the transmission system and is expected to be completed by 2031 [215]. Segment Performance - The regulated companies segment reported net income of $609.8 million, or $1.66 per share, in Q1 2025, up from $540.8 million, or $1.53 per share, in Q1 2024 [187]. - The electric distribution segment's earnings increased by $20.3 million in Q1 2025, primarily due to higher revenues from base distribution rate increases [188]. - The natural gas distribution segment's earnings rose by $27.8 million in Q1 2025, driven by higher revenues from base distribution rate increases effective November 1, 2024 [190]. Regulatory and Compliance - Eversource has recorded a reserve of $39.1 million for the second complaint period as of March 31, 2025, reflecting the difference between billed rates and the established base ROE of 10.57% [222]. - A change of 10 basis points to the base ROE would impact Eversource's after-tax earnings by approximately $3 million for each of the four 15-month complaint periods [233]. - The company continues to monitor regulatory developments, particularly regarding performance-based regulation (PBR) in Connecticut, with final decisions expected in 2025 [237]. - Eversource cannot predict the ultimate outcome of pending matters before FERC, which could materially impact its financial condition and results of operations [235]. Revenue and Sales Volumes - Total sales volumes for electric distribution increased by 3.5% to 12,972 GWh, while firm natural gas sales volumes increased by 11.0% to 68,286 MMcf [244]. - Electric distribution revenues increased by $35.5 million primarily due to a temporary base distribution rate increase at PSNH effective August 1, 2024 [255]. - Natural gas distribution revenues increased by $55.7 million due to base distribution rate increases effective November 1, 2024 at EGMA and NSTAR Gas [255]. - Electric transmission revenues increased by $40.0 million for the three-month period due to a higher transmission rate base from continued investment in infrastructure [259]. Operating Expenses - Total operating expenses for Q1 2025 were $3,192.0 million, up $705.4 million (28.4%) from $2,486.6 million in Q1 2024 [243]. - Eversource's operating expenses included $1,340.3 million for purchased power, natural gas, and transmission, which increased by $104.3 million (8.5%) from the previous year [243]. - Operations and maintenance expenses increased by $24.5 million for the three-month period, driven by higher uncollectible expenses [265]. - Interest expense decreased to $50.0 million from $54.8 million, primarily due to lower long-term debt costs [272]. Dividend and Shareholder Returns - In Q1 2025, Eversource paid cash dividends totaling $270.2 million, compared to $244.8 million in Q1 2024, reflecting a year-over-year increase in shareholder returns [208].

Core Insights - Eversource Energy (ES) reported first-quarter 2025 adjusted earnings of $1.50 per share, matching the Zacks Consensus Estimate, with a slight increase of 0.7% from the previous year's $1.49 [1] - Total revenues reached $4.12 billion, exceeding the Zacks Consensus Estimate of $3.65 billion by 12.7%, and reflecting a year-over-year increase of 23.7% from $3.33 billion [1] Financial Performance - Total operating expenses were $3.19 billion, up 28.1% year over year, driven by higher costs in purchased power, natural gas, transmission, operations, maintenance, and depreciation [2] - Operating income was reported at $926.4 million, an increase of 9.5% year over year [2] - Interest expenses rose to $300.8 million, marking a 20% increase compared to the prior year [2] Segment Performance - Electric Transmission segment earnings totaled $199.4 million, up 12.8% year over year, attributed to increased investment in the transmission system [3] - Electric Distribution segment earnings were $188.4 million, up 12.1% year over year, due to higher revenues from base distribution rate increases in New Hampshire and Massachusetts [3] - Natural Gas Distribution reported earnings of $218.4 million, an increase from $190.6 million in the previous year [4] - Water Distribution earnings decreased to $3.6 million from $5.4 million in the year-ago quarter [4] - The Eversource Parent & Other Companies segment reported a loss of $59 million, wider than the previous year's loss of $19 million, primarily due to higher interest expenses [5] Guidance and Future Outlook - Eversource Energy expects 2025 earnings in the range of $4.67-$4.82 per share, with the Zacks Consensus Estimate at $4.73 per share [6] - The company anticipates a long-term EPS growth rate of 5% to 7% through 2029, using $4.57 (in 2024) as a base [6] - Planned capital investments are projected to be nearly $24.2 billion for the period 2025-2029 [6] Zacks Rank - Eversource Energy currently holds a Zacks Rank 3 (Hold) [7]

Eversource Energy (ES) Q1 2025 Earnings Call May 02, 2025 09:00 AM ET Company Participants Rima Hyder - VP - Investor RelationsJoseph Nolan - President, CEO & ChairmanJohn Moreira - Executive VP. CFO & TreasurerDurgesh Chopra - Managing DirectorCarly Davenport - Vice President, Equity ResearchAnthony Crowdell - Managing DirectorAndrew Weisel - Director Conference Call Participants None - AnalystJeremy Tonet - AnalystSophie Karp - Managing Director & Equity Research AnalystTravis Miller - AnalystJulien Dumou ...

Financial Data and Key Metrics Changes - The company reported GAAP and recurring earnings of $1.5 per share for the first quarter, compared to $1.49 per share in the previous year, indicating a slight increase in earnings [16] - Higher utility earnings were largely offset by a decrease in parent and other earnings, with electric transmission earnings increasing by $0.04 per share due to increased revenues from system investments [17] - The natural gas segment saw improved results of $0.06 per share, primarily due to higher revenues from infrastructure investments [17] Business Line Data and Key Metrics Changes - Electric distribution earnings increased by $0.03 per share, benefiting from grid modernization and rate mechanisms in New Hampshire and Massachusetts [17] - Water earnings remained comparable year over year, as the first quarter is typically a low usage period [18] - Parent losses increased by $0.12 per share in 2025, primarily due to higher interest expenses and the absence of capitalized interest from the offshore wind investment [18] Market Data and Key Metrics Changes - The company is projecting an 8% rate base growth over the next five years, with a strategic shift towards higher distribution spending in Massachusetts to meet electrification goals [6] - The company is examining numerous opportunities related to the ISO New England's new RFP for transmission operators to address future load growth [7] Company Strategy and Development Direction - The company aims to leverage its strengths in transmission and distribution investment opportunities, reaffirming its 2025 EPS guidance and long-term EPS growth rate of 5% to 7% through 2029 [5] - The company is focused on customer innovation and affordability, investing in advanced technologies to enhance reliability and efficiency [8] - The divestment of Aquarion Water is a key strategic initiative expected to close by the end of the year, which will improve the company's FFO to debt ratio [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive value for customers and shareholders, emphasizing a commitment to sustained growth and strategic vision [14] - The management highlighted ongoing efforts to address affordability and stabilize rates in response to high gas bills due to increased demand [10] - The company is optimistic about its future growth opportunities, particularly in transmission and distribution, as well as customer-focused investments [28] Other Important Information - The company is actively working with state leaders to develop long-term solutions for rate stability and transparency [11] - The company has made significant progress in its AMI project, with 40% of the communication network deployment completed [9] - The company expects to see a 6% reduction in average residential customer rates in Connecticut due to the implementation of an annual rate adjustment mechanism [20] Q&A Session Summary Question: Tariff exposure related to offshore projects - Management confirmed that all necessary equipment has been procured and does not anticipate significant challenges related to tariffs for the Revolution project [32][34] Question: Regulatory approval timeline for Aquarion - Management expects the transaction to close in 2025, with no anticipated issues in the regulatory approval process [39][41] Question: Impact of securitization on equity needs - Management indicated that if securitization occurs, they would revisit their equity needs [46] Question: Update on AMI process - Management is seeking clarity on the recovery of expenditures related to the AMI process [47] Question: PURA composition and timing for certainty - Management expressed eagerness for a stable regulatory climate but could not predict the timing for filling the PURA seats [52] Question: FFO to debt improvement expectations - Management expects significant improvement in FFO to debt metrics due to enhanced cash flows from operations [60] Question: Millstone recontracting rates - Management noted that it is too early to determine the impact of the Millstone contract, which is up in 2029 [68] Question: GSEP rule changes impact - Management stated that the GSEP filing's impact is manageable and they continue to support safe and reliable gas services [76] Question: Completion percentage of the Revolution project - Management did not provide a specific percentage but confirmed that construction is progressing well [78]