is profitable again.
The Houston energy company surprised Wall Street -- which was bracing for another loss -- by ending the first quarter of 2003 in the black. Excluding special items, which actually pushed profits even higher, Dynegy reported first-quarter earnings of $50 million.
Counting special gains, Dynegy posted first-quarter profits or $147 million, or 17 cents a share, reversing a steep loss from a year earlier. Analysts polled by Thomson/First Call had expected Dynegy to suffer a 15-cent loss this quarter before going on to become profitable through the rest of the year.
News of the company's surprising profits sent shares of Dynegy surging 18% to $4.43 -- their highest price since last summer -- in the premarket session.
Dynegy attributed its sudden turnaround -- which ends a long losing streak that began with
downfall -- to a favorable business environment and the company's underlying strengths.
"Higher commodity prices increased operating margins across all commercial areas of our business, and weather-driven demand resulted in greater volumes produced and sold," CEO Bruce Williamson said. "Our results for the first quarter demonstrate the value that the new Dynegy can deliver."
Following its strong first quarter, Dynegy boosted full-year EPS guidance to between 10 cents and 18 cents. Analysts were expecting profits of only a nickel a share, well short of even Dynegy's previous guidance of 8 cents to 15 cents a share.
Wall Street analysts were generally cool on the stock ahead of Tuesday's earnings. None of them rate Dynegy a buy, and some have already dropped coverage on the name after recommending that their clients sell.
Following Tuesday's premarket rally, Dynegy shares are up 275% for the year.