Dominion Energy (D stock) fell 3.02% in the 4th August 2023 trading session even after reporting positive Quarter 2 results. The reason for the downfall was issuing Quarter 3 earning guidance well below the analyst expectation.
The energy company forecasts quarter-on-quarter growth in adjusted earnings which fails to meet analysts’ estimates. Dominion Energy expects earnings per share of $0.72 – $0.87 while the consensus estimates it to be $1.09.
The stock price was bullish during the end of July 2023 after it formed support at $51 but the move was halted as the price faced strong rejection from $54.50. The rejection induced strong bearish momentum and the price was successful in breaking the $51 support.
The Q2 earnings results also fueled the bearish momentum. The price has reached near the major support level of $48.80. If the price can sustain above $48.80 and gain bullish momentum, it might retest the $51 support turned resistance level.
Risk-averse traders should wait for a candle to close below $48.80 and if the next candle is successful in breaking the low of the previous candle, it might melt down toward $46.70 causing a downfall of 4.15%.
Reasons For the Downfall of Dominion Energy
The utilities select sector SPDR ETF, whose top holdings are Consolidated Edison (ED) and Dominion Energy (D) has dropped 6% in the current year. A brighter outlook, higher rates, and the comeback of animal spirit have caused investors to avoid the sector, which has been a defensive play that is popular with dividend investors.
Dominion Energy has also stated that Coastal Virginia Offshore Wind project is on budget and on track for completion in late 2026. Dominion Energy has a lower return on equity than the average in the integrated utility industry classification. The company has a ROE of 4.6% while the industry average is 9.1%.
Will D Stock Price Melt to $46.70 Level?
Chaikin money flow (CMF) score of D stock has dropped below the 0 mark since the start of August 2023 and currently stands at -0.18 suggesting weakness in the market. The stock price has slipped below 20, 50, 100 and the 200-day exponential moving average indicates bearish momentum.
The relative strength index (RSI) will soon enter the oversold zone if bearish momentum continues. RSI trades at 31.27 implying strong bearish momentum. The Bollinger bands have also started to expand indicating a rise in volatility.
Dominion stock price has crossed the lower band which indicates the possibility of a short-term pullback.
Conclusion
The Q3 earnings guidance turned out to be the reason for the downfall even after crushing the estimates of consensus.
Technical Levels
- Major support: $46.70 and $44
- Major resistance: $54.50 and $57
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading assets comes with a risk of financial loss.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2023/08/07/dominion-energy-d-stock-price-descends-after-beating-estimates/