Roger S. Conrad

Q2 results and guidance updates are in for roughly nine in ten companies in our Utility Report Card coverage universe. And they’re in for 35 of the 40 represented in the Model Portfolios. I’ll send an Alert if the view changes for the handful left to report.

Oil prices have stabilized around $40 a barrel the past two months. And a hotter than anticipated summer has pushed North American benchmark natural gas to more than $2 per million British Thermal Units.

Many analysts exclusively use big data to discover major economic and stock market trends. My problem with that is if you’re always 30,000 feet up, you’ll miss a lot of what’s happening on the ground. Utilities and essential services companies touch literally every corner of the economy. Consequently, talking a walk through their results every quarter is a great way to discern big picture trends from the ground up.

Roger Conrad will host an online chat for Conrad's Utility Investor subscribers on Aug. 13, 2020 at 2 PM Eastern time.

If you own shares of Conservative Holding Brookfield Renewable Partners (TSX: BEP-U, NYSE: BEP), you’ll soon notice they currently trade in the low 40s, versus a low 50s price just a few days ago. Don’t despair. The price change is the result of a uniquely structured 5-to-4 stock split. The overall value of your Brookfield position has not changed.

The numbers were never going to be pretty for North American energy midstream companies. Management teams warned this spring that Covid-19 fallout was crushing volumes on both the upstream and downstream ends of the business. But with Kinder Morgan Inc. (NYSE: KMI) clearly managing these turbulent times, investors can afford to remain patient with this sector.

Chevron Corp (NYSE: CVX) and Sunrun Inc (NSDQ: RUN) are weathering industry challenges far better than most rivals, positioning them on the leading edge of a building wave of energy mergers and acquisitions.

Elections have consequences, especially for highly regulated industries like electric utilities. And a prospective Biden Administration could actually get most of the way to its  energy goals because utilities are already quickly moving in this direction.

Just how much damage is Covid-19 fallout doing to corporate earnings, dividends and balance sheets? We’ll get our best indication yet over the next month or so, as the vast majority of coverage universe companies report calendar Q2 results and update guidance.

The good news is regulated utilities appear to be tracking the expectations management communicated during Q1 earnings calls. Conservative Holding Sempra Energy (NYSE: SRE) in late June actually raised the mid-point of its 2020 earnings guidance from $7.10 to $7.50 per share.