Dominion Resources Inc. (NYSE:D) reported fourth quarter and full year results this morning, and the news was mixed. For the quarter, EPS hit $0.60 on $348 million in income, compared with EPS of $0.52 last year on income of $299 million. Revenue was $4.17 billion. Analysts expected EPS of $0.68 on revenue of $3.51 billion.

For the full year, Dominion reported GAAP net income of $1.83 billion,compared with $2.54 billion in 2007. The 2007 figure includes about$1.5 billion from the sale of certain assets. Operating earnings for2008 totaled $1.83 billion, compared with 2007 operating earnings of$1.68 billion. EPS for the full year hit $3.16, compared with EPS in2007 of $2.56.

Dominion attributed improved quarterly earnings to "lower outage costs"at its plants, lower taxes, lower expenses, and better margins from itsmerchant power business. The company also provided guidance of$0.85-$0.90 EPS for the first quarter of 2009.

The company did not provide guidance for the full year in its releasebecause it was unwilling to predict the effects of "matters such as,but not limited to, divestitures or changes in accounting principles"on GAAP earnings. However, in a 43-page guidance document available onDominion’s web site,2009 operating EPS is estimated at $3.20-$3.30. Operating EPS estimatesfor 2010 total $3.33-$3.50.

Dominion operates both regulated and merchant power generation,electricity transmission lines, and natural gas pipelines and storageand gathering systems. In the last five years, the stock’s high is$48.50/share, which it hit last October. Over the same five years, thestock has appreciated by about $2.50/share. The company’s market cap isabout $21 billion.

Utilities aren’t sexy or exciting and Dominion doesn’t break that mold.Still, the mix of regulated rates and merchant sales is providingsteady, if not spectacular, returns. Dominion’s shares are up about 2%this morning.

Paul Ausick
January 29, 2009

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