Xcel Energy Inc.
XEL · Nasdaq
Next quarter
Reports Oct 29, 2026.
Consensus is $1.35 EPS for Sep 2026 across 4 estimates, ranging $1.28 to $1.42.
XEL Jun 2026
- 17.72%
- -0.04%
- $0.79
- $0.93
- —
- —
Reported results
- $706.00M
- $586.00M
- $0.93
Highlights
- Earnings beat: Second-quarter diluted GAAP and ongoing EPS were $0.93, ahead of the $0.79 consensus by 17.72%, versus $0.75 a year ago and $0.89 in Q1 2026.
- Infrastructure recovery: The primary earnings driver was higher recovery of electric infrastructure investment; AFUDC equity and debt contributed $0.08 per share year over year, while lower depreciation added $0.08.
- Financing drag: Higher interest charges reduced EPS by $0.12 year over year in the quarter and by $0.22 year to date, as total debt reached $39.5 billion at June 30 versus $33.9 billion at December 31.
- Operating result: Operating income rose to $706 million from $577 million, while net income increased to $586 million from $444 million despite operating revenue declining 5% to $3.12 billion.
- Load growth: Weather-normalized retail electric sales increased 1.5% in the quarter and 2.1% year to date; commercial and industrial sales grew 1.7% and 3.0%, respectively, year to date.
- Regulatory progress: Xcel received a Minnesota electric rate-case decision indicating approximately $211 million of revenue increase over two years at a 9.60% ROE, while Colorado and New Mexico electric settlements propose increases of $225 million and $90 million.
- Capital intensity: Six-month capital expenditures rose 35% to $5.97 billion, largely for renewable and transmission investment, against $2.80 billion of operating cash flow.
- Guidance maintained: Xcel reaffirmed 2026 ongoing EPS guidance of $4.04-$4.16, assuming constructive regulatory outcomes, roughly 3% weather-normalized electric sales growth and $480-$490 million of capital-rider revenue growth.
- Wildfire exposure: Smokehouse Creek settlements totaled $404 million of expected loss payments, with $56 million of remaining probable losses before insurance and only approximately $80 million of annual insurance coverage remaining.
Analysis
Xcel Energy delivered a strong second quarter against expectations, with $0.93 of diluted GAAP and ongoing EPS versus the $0.79 consensus, $0.75 in Q2 2025 and $0.89 in Q1 2026. Net income rose 32% year over year to $586 million and operating income increased 22% to $706 million, although both sequential measures softened from $754 million and $556 million of operating income and net income, respectively. The quarter’s earnings growth was primarily rate-base driven: higher recovery of electric infrastructure investment, stronger AFUDC and lower depreciation more than offset higher financing costs and common-equity dilution.
The print also highlighted the trade-off in Xcel’s capital program. Weather-normalized electric demand remained constructive, particularly C&I sales, but natural-gas sales declined 6.9% year over year in the quarter. Capital expenditures reached $5.97 billion in the first half, pushing debt to $39.5 billion from $33.9 billion at year-end and increasing year-to-date interest expense by $174 million. Regulatory momentum improved, with Minnesota’s electric case and proposed Colorado and New Mexico settlements providing potential rate-base support, while the company retained its $4.04-$4.16 guidance range. Wildfire liabilities remain a material uncertainty, particularly for Smokehouse Creek, even as the Marshall matter generated a $19 million insurance-related earnings credit year to date.
Quarterly earnings drivers
Xcel’s $0.18 year-over-year EPS increase to $0.93 was led by regulated utility performance rather than revenue growth. Regulated utility EPS rose to $0.95 from $0.81, while Xcel Energy Inc. and other costs improved to negative $0.02 from negative $0.06.
- Infrastructure recovery: Higher recovery of electric infrastructure investment was the central driver; AFUDC equity and debt added $0.08 per share.
- Cost offsets: Lower electric fuel and purchased-power expense contributed $0.30 per share and lower depreciation contributed $0.08, but these benefits were partly offset by lower electric revenue of $0.18 per share and higher interest charges of $0.12.
- Subsidiaries: PSCo EPS increased $0.06 to $0.32, NSP-Minnesota increased $0.05 to $0.37, SPS increased $0.02 to $0.19 and NSP-Wisconsin increased $0.01 to $0.06.
Demand and rate cases
Underlying electric demand was positive, with weather-normalized retail electric sales up 1.5% year to date and C&I sales up 3.0%. Management attributed C&I growth to higher use per customer in SPS and NSP-Minnesota, customer growth in Wisconsin, and stronger energy-sector and manufacturing activity. Natural-gas demand remained weak, with weather-normalized firm sales down 1.5% year to date.
- Minnesota electric: The MPUC’s verbal decision indicated approximately $211 million of revenue increase over two years, a 9.60% ROE and continuation of sales true-up and new tracker mechanisms.
- Colorado electric: A non-unanimous settlement proposes a $225 million revenue increase and a 9.3% ROE; a CPUC decision is expected in Q3 2026.
- New Mexico electric: A non-unanimous stipulation proposes a $90 million base-rate increase at a 9.5% ROE, with implementation expected in December 2026.
- Large load opportunity: The proposed Minnesota Google data-center agreement could provide approximately $1.1 billion of customer benefits if approved, including a 1,900 MW clean-energy accelerator program.
Capital and financing
Xcel is funding an unusually large investment program while absorbing a higher cost of capital. Six-month capital expenditures increased to $5.97 billion from $4.42 billion, primarily reflecting renewable and transmission projects. Operating cash flow improved to $2.80 billion from $2.11 billion, aided substantially by insurance reimbursements, leaving financing central to the capital plan.
- Leverage: Total debt was $39.46 billion at June 30, up from $33.88 billion at December 31; debt represented 62% of capitalization versus 59% at year-end.
- Debt issuance: The company issued $4.69 billion of long-term debt in the first half and had $2.51 billion of short-term debt outstanding at June 30.
- Equity pipeline: Xcel entered forward sale agreements for 42.5 million shares with minimum expected proceeds of $3.2 billion; 69.7 million shares remained unsettled, representing minimum expected proceeds of $5.2 billion.
- Liquidity: As of July 28, total liquidity was $4.69 billion, including $3.60 billion of available credit facilities and $1.09 billion of cash.
Wildfire liabilities
Wildfire accounting was not a major second-quarter earnings swing, but the legal and insurance exposure remains a key risk to the capital profile. Marshall Fire settlements were executed with all plaintiffs and subrogation insurers, while higher estimated insurance recoveries produced a $19 million net earnings credit in the first half.
- Smokehouse Creek: SPS had settled 237 of 304 claims through its claims process and 79 of approximately 107 additional claims presented through attorneys; expected settlement payments totaled $404 million.
- Remaining exposure: Xcel recorded $56 million of remaining probable losses before insurance, for total estimated losses of $460 million, plus $43 million of legal costs.
- Insurance cushion: The annual policy provides $525 million of coverage, but approximately $80 million remained after settlements and legal costs through June 30; potential penalties, punitive damages and other claims are excluded from the estimate.
2026 guidance
Management reaffirmed ongoing EPS guidance of $4.04-$4.16. The outlook assumes constructive outcomes in pending rate cases and other regulatory proceedings, normal weather for the balance of the year and approximately 3% weather-normalized retail electric sales growth. The guidance also incorporates higher financing and depreciation costs alongside continued capital recovery.
- Revenue support: Capital-rider revenue is expected to increase $480-$490 million from 2025 levels.
- Cost outlook: O&M is projected to rise approximately 3%, depreciation by $140-$150 million and interest expense net of AFUDC debt by $240-$250 million.
- Growth objectives: Xcel continues to target long-term EPS growth of 6% to 8% or more from a $3.80 base, annual dividend growth of 4% to 6% and a 45% to 55% payout ratio.
