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Energy services holding company, AGL Resources Inc. (GAS - Analyst Report) is set to report second-quarter 2014 results after the market closes on Jul 29.

Last quarter, AGL Resources failed to meet the Zacks Consensus Estimate and posted a negative earnings surprise of 25.95% — the second consecutive quarterly miss for the company. Let’s see how things are shaping up for this announcement.

Factors to Consider

Positioned in a niche industry with high barriers to entry, this energy services holding company enjoys near-monopoly status in its area of operation. On top of this, the utility’s best-in-class cost control and recession-proof business model presents additional growth opportunities for AGL Resources.

The company is also set to benefit from continued production growth in Marcellus and the need to transport the produce to fulfill the increasing natural gas demand. During the first-quarter conference call, AGL Resources raised its 2014 earnings per share (EPS) guidance in the range of $2.80 to $2.90. This could be an indication of improved results.

However, operating results for AGL Resources are affected by weather conditions and may vary on a seasonal and quarterly basis. Usually, almost 75% of the deliveries and sales occur during the six-month period of October to March. Thus, the second-quarter results will not likely benefit much.

Earnings Whispers?

Our proven model does not conclusively show that AGL Resources is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.  

Zacks ESP:  Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus estimate, is 0.00%.

Zacks Rank: Though AGL Resources’ Zacks Rank #2 (Buy) increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.  

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies from the utilities industry for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:  

Ameren Corporation (AEE - Analyst Report) has Earnings ESP of +14.04% and a Zacks Rank #2.

Consolidated Edison, Inc. (ED - Analyst Report) has Earnings ESP of +9.26% and a Zacks Rank #2

BCE Inc. (BCE - Analyst Report) has Earnings ESP of +6.25% and a Zacks Rank #2.

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