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Atlanta, Georgia-based energy services holding company AGL Resources Inc. (GAS - Analyst Report) is set to release its first quarter 2014 results before the opening bell on Tuesday, Apr 29.

In the preceding three-month period, AGL Resources delivered a negative 11.0% earnings surprise. However, we expect the company to turn around and beat expectations in the first quarter.

Why a Likely Positive Surprise?

Our proven model conclusively shows that AGL Resources is likely to beat earnings this quarter because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +10.27%. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank #1 (Strong Buy): Note that stocks with Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of AGL Resources’ Zacks Rank #1 (Strong Buy) and an earnings ESP of +10.27% make us confident of an earnings beat on Apr 29.

What Will Drive the Better-than-Expected Earnings?

AGL Resources is a premier electric utility with relatively low risk earnings growth and an expanding dividend that yields a solid 4%. Positioned in a niche industry with high barriers to entry, this energy services holding company enjoys near-monopoly status in its area of operation. In particular, increase in natural gas demand this past winter – on the back of unusually cold weather – is likely to translate into heightened demand for AGL Resources’ services.

Other Stocks to Consider

AGL Resources is not the only company looking up this earnings season. We see likely earnings beats coming from these utilities as well:

Vectren Corp. (VVC - Snapshot Report) has an Earnings ESP of +1.39% and holds a Zacks Rank #2 (Buy). Vectren will report first quarter earnings on May 9.

Ameren Corp. (AEE - Analyst Report) has an Earnings ESP of +6.25% and holds a Zacks Rank #2 (Buy). Ameren will report first quarter earnings on May 8.

Calpine Corp. (CPN - Snapshot Report) has an Earnings ESP of +16.67% and holds a Zacks Rank #2 (Buy). Calpine will report first quarter earnings on May 1.

Read the Full Research Report on GAS
Read the Full Research Report on AEE
Read the Full Research Report on CPN
Read the Full Research Report on VVC


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