Eversource Energy (ES) Q2 2026 Earnings Call Transcript

Eversource reported Q2 GAAP EPS of $0.14 (down from $0.96 YoY) due to non-cash charges of $111.4M after-tax for the Aquarion sale and a $164M after-tax offshore wind contingent-liability increase, while recurring/non-GAAP EPS was $0.87. The company reaffirmed 2026 non-GAAP EPS guidance of $4.52–$4.72/share despite regulatory headwinds from a FERC ROE base rate cut to 9.57% (from 10.57% in March), and it noted storm cost securitization proceeds of about $670M expected in Connecticut following PURA approval of ~$870M of requested ~$975M (carrying charges were not approved). It also highlighted a $2.2B ISO-NE transmission project preliminarily selected at Eversource’s ~$700M share and maintained a $21.5B five-year capital plan through 2028, with equity needs of $800M–$1.1B and no common equity issuance planned for the remainder of 2026.

Analysis

This is less a clean earnings story than a credit/regulatory de-risking story. The balance-sheet reset and narrower business mix should support a higher utility multiple over 6-18 months, but near-term upside is capped because current guidance already embeds a worse transmission ROE regime. In other words, the stock now needs either a favorable legal outcome or a credible path to incremental rate base growth to re-rate; operational execution alone is not enough.

The biggest second-order beneficiary is the regional transmission ecosystem: if the New England project is finalized, engineering, EPC, and equipment demand shifts forward and could tighten contractor capacity for peers. Avangrid is the obvious co-winner on the line award, while rate-sensitive New England consumers and distributed generation advocates are the implicit losers if utilities get broader bill recovery for resiliency and grid modernization. The AMI proposal is also a signal that management is trying to lock in a multi-year capital runway before vendor pricing and inflation move against it.

The key risk is asymmetry around regulation: the market can tolerate one negative headline, but a denial on FERC refunds or a materially softer Connecticut ROE would force a reset to the capital plan and could re-open equity-dilution concerns. Conversely, a stay or favorable court timing in the next 1-3 months would improve FFO/debt optics without changing operating fundamentals. The contrarian takeaway is that the wind charge may already be in the stock, while the more important variable is whether this becomes a self-funding pure-play utility with durable 5%-7% growth; that outcome is not fully priced because investors are still anchoring on regulatory noise rather than rate-base compounding.

Key Decisions for Investors

• Tactically accumulate ES only on post-call weakness: if the stock sells off 3-5% without a new adverse regulatory headline, start a 1-3 month long for balance-sheet normalization and securitization upside.
• Relative-value expression: long ES / short XLU for the next 1-3 months if you want exposure to company-specific de-risking and potential transmission award, while hedging broader utility beta.
• Set a catalyst watch on ES through late September and Nov. 30: if the ISO-NE transmission process is finalized and the FERC prospective ROE goes live without a court setback, add to the long; if the stay is denied or Connecticut ROE assumptions weaken, cut quickly.
• Avoid chasing through the litigation overhang with options unless implied vol is cheap; the cleaner payoff is common stock after regulatory clarity, not a forced call-spread.
• If looking for second-order winners, add AGR or regional transmission/EPC suppliers on confirmation of the New England project, but treat that as a catalyst trade, not a long-term thesis.