OGE is a buy after today's wrong-way earnings move
OGE today reported earnings of $1.25 per share, up from $1.02 the same quarter last year and beating the consensus estimate of $1.10. Revenue was $739.2 million, up from $$684.5 million last year and beating the $728.2 million estimate. The company boosted full-year guidance to $2.24 to $2.30 per share, up from its previous guidance of $2.05 to $2.20 per share and above the consensus estimate of $2.13 per share.
OGE has fallen today despite the great news, which presents an opportunity to buy. OGE is a growing company with a solid dividend yield of 3.5%.
I think the reason for the stock's drop is that OGE's guidance section is a bit confusing. OGE is a holding company with a number of subsidiaries, including a utility called OG&E. The guidance section of the earnings report reads,
"The Company's 2019 OG&E earnings guidance is projected to be between $1.74 and $1.78 per average diluted share. This is an increase from the previously issued guidance between $1.55 and $1.62 per average diluted share. . . . OGE Energy consolidated earnings guidance projection for 2019 has increased to between $2.24 and $2.30 per average diluted share. This is an increase from the previously issued guidance of between $2.05 and $2.20 per average diluted share and is primarily due to higher projected earnings at the utility."
So you can imagine that if you read the report and compared that first guidance range with analyst estimates, it would look way lower than the estimates. Investors who play earnings don't always read the reports very carefully, because they're trying to react quickly. That may have led them to jump the wrong way if they read only the first sentence of the guidance paragraph and confused OG&E's guidance with OGE's. These sorts of errors happen in the market sometimes, and it presents an opportunity for the more careful investor.
OGE has fallen today despite the great news, which presents an opportunity to buy. OGE is a growing company with a solid dividend yield of 3.5%.
I think the reason for the stock's drop is that OGE's guidance section is a bit confusing. OGE is a holding company with a number of subsidiaries, including a utility called OG&E. The guidance section of the earnings report reads,
"The Company's 2019 OG&E earnings guidance is projected to be between $1.74 and $1.78 per average diluted share. This is an increase from the previously issued guidance between $1.55 and $1.62 per average diluted share. . . . OGE Energy consolidated earnings guidance projection for 2019 has increased to between $2.24 and $2.30 per average diluted share. This is an increase from the previously issued guidance of between $2.05 and $2.20 per average diluted share and is primarily due to higher projected earnings at the utility."
So you can imagine that if you read the report and compared that first guidance range with analyst estimates, it would look way lower than the estimates. Investors who play earnings don't always read the reports very carefully, because they're trying to react quickly. That may have led them to jump the wrong way if they read only the first sentence of the guidance paragraph and confused OG&E's guidance with OGE's. These sorts of errors happen in the market sometimes, and it presents an opportunity for the more careful investor.
Trade closed manually:
This may hit $45, but I wouldn't bet on much more than that.