Domino Energy: Emerging Market Trends

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Domino Energy: Emerging Market Trends

Natural gas presents yet another important opportunity expected to drive Domino Energy bottom line going forward. The company is in the process of expanding and upgrading its delivery systems in a bid to meet the growing demand for natural gas.

The utility company has already completed the construction of Cove Point LNG and Atlantic Coast pipeline as it looks to service customers already lined up. In addition, the two mainstream assets will allow the company to facilitate the sale of U.S LNG to world markets

Domino Energy’s Earnings/Revenue Growth

Domino Energy reported a solid fourth quarter, whereby earnings were just above the middle of forecast. Full-year profits came in at $3.60 a share, slightly below the high end $3.40-$3.90 guidance. Earnings growth came about, despite reduced demand for electricity and natural gas, because of poor weather for the better part of last year.

With expectations high that the weather will return to normal levels, Domino Energy expects earnings to tick higher on increased demand for electricity and natural gas.

Construction of three major expansion projects including the Cove Point LNG export terminal should fuel higher earnings in 2018 as the other two projects accelerate growth in the coming years

For the current year, Domino Energy expects earnings of between $3.80 and $4.25 a share, up 11.8% from 2017. Earnings growth should start in the first quarter whereby the energy company expects earnings of between $0.95 and $1.15 a share, up 8.2% from the first quarter of last year. Operating revenues are projected to grow by 10% in 2018

Dividend Growth

Domino Energy has already raised its dividend rate to 4.4% which is slightly above what other players in the industry pay. Its dividend yield grew by 8% in both 2016 and 2017 and is expected to grow by 10% in 2018.

What to Expect from Domino Energy In 2018

Domino shares have dropped by 11.1% since the start of the year, despite the company posting better than expected earnings and revenues. The underperformance appears to be an overreaction given that the company continues to outperform the overall industry when it comes to business operation and efficiency.

The company’s business mix has improved in the last few years with gas contributions after the Quester acquisition further strengthening the firm’s growth prospects. Completion of three major electricity and natural gas projects means the company is on the cusp of servicing more customers than it did last year.

What this means is that the company will be able to generate more revenues which should lead to a further growth in earnings. A merger with SCANA Corporation is another development expected to further strengthen the company’s revenue streams which should bolster the bottom line.

Capital spending and investments on the natural gas side of the business should keep the diversified utility on the path to growth in 2018. The result should be a reversal in the direction of trade, for the stock, after coming under pressure.

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