Utility Earnings and Stock Prices: Behind the Divergence

The Dow Jones Utility Average is now underwater by nearly -7 percent including dividends so far in 2023. That’s more than 25 percentage points behind the S&P 500, which continues to be pushed higher by momentum-fueled big technology stocks. In contrast, twice as many companies in my coverage universe (18) have so far raised their 2023 guidance following Q2 earnings as reduced it. And none have cut the longer-term growth guidance that will ultimately drive their share prices higher. Electric, gas, water and especially communications companies do face definite headwinds. As Utility Report Card comments show, only a handful avoided big increases in interest expense the last 12 months. Volume sales to a number of industries contracted. Renewable energy generators’ output took a hit from weaker wind and water conditions. And competition is rapidly running smaller communications service providers out of business.