Roger S. Conrad

Calendar Q4 earnings results are almost all in for the nearly 200 essential services companies in our Utility Report Card coverage universe.

Takeaway one: Except for the handful of weaklings headed for bankruptcy like Frontier Communications (NYSE: FTR), most are thriving and dividends are safe.

Verizon Communications (NYSE: VZ) expects its revenue growth to accelerate to “mid single digits” in 2020 from last year’s 0.8 percent. That’s based on three drivers.

First is continuing Q4’s favorable trends in wireless and broadband customer additions. The second is accelerating growth in business revenue, as advanced services adoption speeds up with 5-G. And the third is stabilized media services sales, following recent streamlining.

It’s been a difficult couple of years for AGL Energy (ASX: AGL, OTC: AGLXY), Australia’s largest power producer and electricity retailer.

First came the National/Liberal Party federal government’s aggressive reaction to rising prices for natural gas and electricity—a trend AGL had correctly bet on that resulted from a dramatic increase in the country’s LNG exports.

A sharp run up to new all-time highs, followed by a steep one-week plunge that’s leveled off for now between the high and low: That’s where the Dow Jones Utility Average has travelled since the February issue posted.

Economic uncertainty resulting from COVID-19 has shifted utilities’ momentum from positive to negative. And it’s clear we know little now about the ultimate damage to human health and economic growth. But big and sudden declines like this one have historically been followed by mighty rebounds, and huge rewards for those who’ve had the cash and fortitude to buy the right stocks at the bottom. 

Coronavirus (COVID-19) isn’t finished inflicting pain and suffering, particularly on China, and the global economic cost is only beginning to be felt. But one Chinese industry seems to still be moving full-steam ahead.

Cable companies still enjoy success in the B2B market. But these results raise a critical question for the rest of US communications: Who are they taking commercial customers from?

Wholesale political shifts have historically posed great risks for utilities. But despite early concerns, Conservative Income Portfolio holding Dominion Energy (NYSE: D) is apparently faring quite well and scoring big wins

For the eighth year in the past 10, utility stocks finished January in the black. Every time but 2015, they finished the year that way, including a 27.3 percent boost in the Dow Jones Utility Average for 2019.

Conversely, you’d have to go back to 1987 to find a year when a strong January was followed by a sector selloff later on. Every other major DJUA decline was instead preceded by a first month selloff including 2008, 2002, 2001 and 1994.

A big January is therefore a favorable portent for our returns in 2020. So are the calendar Q4 earnings and guidance updates we’ve seen so far for Utility Report Card coverage universe companies, highlighted in the comments of this month’s table.