Dominion Energy Reports Solid Q2 Results as COVID-19 Impact Diminishes
Analyst Note | by Charles Fishman
We are reaffirming our fair value estimate of $80 per share after wide-moat Dominion Energy reported solid 2020 second-quarter operating earnings per share of $0.82 versus $0.77 in the same period in 2019, discussed the impact of COVID-19 on electric sales, and fine-tuned its planned equity capital market financing activities over the next five years. The second-quarter results were not adjusted for the recently announced sale of most of the assets in the gas, storage, and transmission segment.
We are also reaffirming our 2020 EPS estimate of $3.50, the midpoint of Dominion's unchanged guidance range of $3.37-$3.63. Strong residential and data center demand continued to support electricity sales for Dominion Energy Virginia, and weather-normalized sales are actually slightly higher than the two-year average since the pandemic began in March.
At Dominion Energy South Carolina, sales have for the most part recovered and month to date in July are only 1% below normal demand. Through June 30, Dominion estimates COVID-19 has negatively affected operating EPS by $0.04, which has been largely offset by cost reductions, giving us a high level of confidence in our earnings estimate.
Dominion plans to issue slightly more equity than we had assumed in 2021-24. However, the recent strength in the share price more than offset the modest increase in equity with respect to our estimate of weighted average shares outstanding for 2023-24. Thus, our EPS growth rate increased 40 basis points for 2020-24, to 7.9%, but there was no material impact on our fair value estimate.