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4 Utility Stocks Likely to Beat Q4 Earnings Estimates

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At present, 333 S&P 500 members have reported fourth-quarter results, out of which 17.9% belong to the Utility space. In the Zacks Utilities sector, the companies that already reported quarterly results registered 4.6% growth in earnings. A top tier utility, Dominion Energy (D - Free Report) recently reported fourth-quarter results, beating the Zacks Consensus Estimate for earnings.

For the quarter as a whole, the sector is expected to witness a decline of 2.8% and 0.1% in earnings and revenues, respectively, per our latest Earnings Trends report.

What Will Favor Utility Stocks?

Utilities provide 24x7 electricity, natural gas and water to millions of customers across the United States. New electric and water rates, increase in customers, as well as proper management of expenses are likely to have had a positive impact on the utilities’ fourth-quarter earnings.

The pandemic did not deter utilities from continuing with their capital expenditure projects to fortify infrastructure. The prevailing near-zero interest rates aided the utilities to fund capital-intensive projects despite the challenges created by the pandemic. Strengthening of infrastructure has allowed the utilities to provide services and quickly restore operations after natural calamities. The gradual reopening of economic activities continued to have a positive impact on the demand for utility services from the commercial and industrial space. Demand from the residential space remained strong in fourth-quarter 2020.

A clear transition is evident in the utility space, with utilities moving away from older, inefficient and higher-pollution generating units toward cleaner as well as more affordable alternatives. Increasing usage of renewable sources, development of affordable battery storage units and the usage of new technology are helping utilities to cut down emissions, as well as provide affordable energy to customers.

Picking Winners From the Utility Space

Choosing the right stock for one’s portfolio from too many participants is certainly a tough job. An easy way to streamline the list is by selecting stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Per our proprietary methodology, Earnings ESP is a determining factor for zeroing in on stocks with maximum chances of beating on earnings. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our research shows that stocks with the right combination of the two key ingredients have 70% higher chances of delivering an earnings surprise.

For investors looking to find winners, we have highlighted four Utility stocks that are poised to beat fourth-quarter earnings estimates.

Our Utility Selections

Columbus, OH-based American Electric Power Company, Inc. (AEP - Free Report) is a public utility holding company, which, through directly and indirectly-owned subsidiaries, generates, transmits and distributes electricity, natural gas, as well as other commodities.

American Electric Power currently has a Zacks Rank #3 and an Earnings ESP of +1.52%. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is scheduled to announce quarterly numbers on Feb 25.


San Diego, CA-based Sempra Energy (SRE - Free Report) is an energy services holding company involved in the sale, distribution, storage, and transportation of electricity as well as natural gas.

Sempra currently has a Zacks Rank of 3 and an Earnings ESP of +6.87%. It is scheduled to announce quarterly numbers on Feb 25.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise

Sempra Energy price-eps-surprise | Sempra Energy Quote


Folsom, NJ-based South Jersey Industries, Inc. , through its subsidiaries, engages in the purchase, transmission and sale of natural gas.

South Jersey Industries currently has a Zacks Rank of 3 and an Earnings ESP of +1.72%. It is scheduled to announce quarterly numbers on Feb 24.


Houston, TX-based CenterPoint Energy Inc. (CNP - Free Report) is a domestic energy delivery company that provides electric transmission & distribution, natural gas distribution, along with competitive natural gas sales and services operations.

CenterPoint Energy currently has a Zacks Rank of 3 and an Earnings ESP of +11.11%. It is scheduled to announce quarterly numbers on Feb 25.

CenterPoint Energy, Inc. Price and EPS Surprise

CenterPoint Energy, Inc. Price and EPS Surprise

CenterPoint Energy, Inc. price-eps-surprise | CenterPoint Energy, Inc. Quote

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