DTE Energy Co. :DTE-US: Earnings Analysis: Q4, 2016 By the Numbers : February 13, 2017

DTE Energy Co. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of DTE Energy Co. – Xcel Energy Inc., CMS Energy Corporation and WEC Energy Group Inc (XEL-US, CMS-US and WEC-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 2874 million, Net Earnings of USD 131 million.
  • Gross margins widened from 12.59% to 13.81% compared to the same period last year, operating (EBITDA) margins now 20.29% from 18.66%.
  • Earnings growth from operating margin improvements as well as one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 2874 2888 2272 2653 2487
Revenue Growth (%YOY) 15.56 14.06 0.75 -13.86 -19.17
Earnings (mil) 131 338 152 247 80
Earnings Growth (%YOY) 63.75 27.55 39.45 -9.52 -73.24
Net Margin (%) 4.56 11.7 6.69 9.31 3.22
EPS 0.73 1.88 0.84 1.37 0.44
Return on Equity (%) 5.73 15.07 6.87 11.16 3.63
Return on Assets (%) 1.78 4.64 2.12 3.45 1.12

Access our Ratings and Scores for DTE Energy Co.

Market Share Versus Profits

Revenues History
Earnings History

DTE-US‘s change in revenue this period compared to the same period last year of 15.56% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that DTE-US is holding onto its market share. Also, for comparison purposes, revenues changed by -0.48% and earnings by -61.24% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings growth was influenced by year-on-year improvement in gross margins from 12.59% to 13.81% as well as better cost controls. As a result, operating margins (EBITDA margins) rose from 18.66% to 20.29% compared to the same period last year. For comparison, gross margins were 17.31% and EBITDA margins were 22.61% in the last reporting period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

DTE-US‘s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently 19.82, compared to last year’s level of 8.67 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating (EBIT) margins from 9.29% to 10.75% and (2) one-time items. The company’s pretax margins are now 5.29% compared to 2.29% for the same period last year.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for DTE Energy Co.

Company Profile

DTE Energy Co. is a diversified energy company, which is primarily engaged in the business of providing electricity and natural gas sales, distribution and storage services throughout Michigan through its subsidiaries. It operates through the following segments: DTE Electric, DTE Gas and Other. The DTE Electric segment is engaged in the generation, purchase, distribution and sale of electricity to residential, commercial and industrial customers in southeastern Michigan. The DTE Gas segment consists principally of DTE Gas, which is engaged in the purchase, storage, transportation, distribution and sale of natural gas residential, commercial and industrial customers throughout Michigan and the sale of gas storage and transportation capacity. The Other segment is involved in natural gas pipelines, gathering and storage; power and industrial projects; and energy marketing and trading operations. The company was founded in January 1995 and is headquartered in Detroit, MI.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of DTE-US.