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Tuesday, May 5, 2020
Genie Energy Ltd. (GNE)
First Quarter Preview
Genie Energy Ltd, through its subsidiaries, operates as a retail energy provider; and an oil and gas exploration company. Its segments are Genie Retail Energy (GRE) which is the key revenue generator, Genie Energy Services (GES), and Genie Oil and Gas (GOGAS). GRE owns and operates retail energy providers (REPs), including IDT Energy, Residents Energy, Town Square Energy, and Mirabito. Its REP businesses resell electricity and natural gas to residential and small business customers in the Eastern and Midwestern United States. GES designs, manufactures and distributes solar panels and also offers energy brokerage and advisory services. GOGAS is an oil and gas exploration company that owns an interest in a contracted drilling services operation and interest in Afek Oil and Gas (Afek).
Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Genie is facing tough 1Q comparisons. In 2019, GNE reported a strong first quarter due to customer and new business acquisitions. The favorable results reversed in the second quarter when mild weather resulted in decreased customer usage, fewer customer conversions, and excess supply held at falling prices. We believe Thursday’s upcoming results could be a repeat of last year’s second quarter. We would remind investors that the shares of GNE fell approximately 30% in response to the announcement of 2Q results before recovering in the fall when the company repurchased shares.
Weather was warm in the first quarter. The EIA reports heating degree days for the first quarter were 14% warmer than normal and 16% warmer than last year. Temperatures were even warmer in the east portion of the United States where GNE’s Retail Energy markets are generally located. This will most likely mean decreased customer usage and lower customer growth. We also believe it is probable the company will need to take a charge to…
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
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