Xcel's profit holds steady, with sales rising faster in smaller markets

Xcel Energy Inc. reported fourth-quarter earnings in line with Wall Street expectations, capping a year in which per-share profits grew nearly 10 percent.

Minneapolis-based Xcel, Minnesota's largest utility, said Thursday it earned $215 million, or 42 cents per share, in the quarter. The results met the consensus forecast of analysts polled by Zacks Investment Research.

Xcel earned 37 cents in the fourth quarter of 2017, including a charge related to the federal tax law change. Without that charge, its year-ago profit was also 42 cents a share.

In the latest quarter, Xcel had $2.9 billion in revenue, a rise of 3 percent over last year.

"The [Xcel] story remains very positive," said Andy Smith, a stock analyst at Edward Jones. "It's consistent, and it's predictable.

Xcel's stock closed Thursday at $52.36, up $1.44 or 2.8 percent.

For all of 2018, Xcel posted a profit of $1.26 billion, or $2.47 per share. That's up from $2.25 per share in 2017.

"Xcel Energy executed exceptionally well in 2018, achieving our financial targets and delivering outstanding value to our customers and stakeholders," Chief Executive Ben Fowke said in a statement.

The company met or exceeded its earnings guidance for the 14th consecutive year in 2018, Fowke said.

Xcel's largest markets are Minnesota and Colorado, and it also operates in Texas, New Mexico, Wisconsin, the Dakotas and Michigan's Upper Peninsula.

The company's weather-adjusted electricity sales were up 1.3 percent in 2018, a healthy increase considering U.S. electricity sales are generally stagnant. Strong economies in the states that Xcel serves helped drive the sales increase, Robert Frenzel, Xcel's chief financial officer, told analysts in conference call.

Sales growth was strongest in Xcel's Texas and New Mexico territories, driven partly by electricity demand from the booming oil industry in those states.

However, oil-related power sales growth should be "modest" in 2019, Frenzel said. Also, the company expects "some specific declines" in large customer power usage — and lower use per residential customer. The upshot: Xcel is projecting relatively flat electricity sales in 2019. Gas sales in 2019 are expected to see zero to 1 percent growth.

The company reiterated its forecast of 5 to 7 percent profit growth in 2019.

Mike Hughlett • 612-673-7003