Xcel EnergyXEL

The company earned $0.93 per share this quarter, up from $0.75 a year ago and ahead of what analysts expected. While revenue of $3.12 billion was lower than the $3.54 billion target, the business is more focused on its profit margin. Most of the growth came from recovering the costs of its power grid and plant upgrades through customer rates.

This is the core of the utility business model: the company spends money to build things like wind farms and transmission lines, and regulators allow it to earn a set profit on those assets. Higher interest rates are making it more expensive to borrow money for these projects, but so far the earnings from new investments are more than covering those extra costs. Management also kept its full-year profit outlook unchanged.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Profit growth acceleration: Ongoing earnings per share grew 24% to $0.93 this quarter, primarily because the company was allowed to recover more of its investment costs in electric infrastructure from customers. This jump shows how the business is successfully turning its massive spending on system upgrades and grid reliability into bottom-line profits.
• Major data center deal: The company signed an agreement to power a new Google data center in Minnesota that will require 1,900 megawatts of clean energy resources. This deal is expected to provide approximately $1.1 billion in benefits to other customers over the life of the contract, helping keep rates affordable as the company expands its system.
• Infrastructure spending returns: Capital spending on system investments led to a $115 million increase in a specialized accounting credit called AFUDC during the first half of the year. This credit represents the financing costs the company is allowed to recover for its construction work in progress, which helps protect profits while new power plants and lines are being built.
• Rising financing costs: Interest charges and financing costs rose 24% to $398 million this quarter as the company carried higher debt levels to fund its expansion. Total debt reached $39.46 billion by the end of June, up from $33.88 billion at the end of last year, which remains a primary headwind to earnings growth.
• Earnings outlook maintained: Management confirmed its full year earnings target range of $4.04 to $4.16 per share for 2026. Meeting the midpoint of this range would represent 6.5% growth over last year, keeping the company on track with its long-term plan to grow profits between 6% and 8% annually.

Our take: This was a very strong quarter where the company translated its heavy infrastructure spending into significant profit growth. While higher interest costs and debt levels are a reality, the massive 1,900 megawatt deal with Google proves the company can attract the high-growth customers needed to support its long-term expansion plans.