The Zacks Utilities sector’s fourth-earnings results have so far shown a positive trend. Only 32.1% of the utilities have reported fourth-quarter results, registering 3.6% earnings growth on the back of a 14.6% revenue improvement.

Utilities have been benefiting from new electric rates, customer additions, cost management, implementation of energy-efficiency programs, ongoing investments to improve the resilience of the electric infrastructure against extreme weather conditions and their transition toward cost-effective alternate sources of fuel to produce electricity. Utilities have been investing in transmission and distribution lines, adding more renewable assets to their generation portfolio, and making the system more resilient to withstand inclement weather conditions and provide 24X7 services to consumers.

The continuation of near-zero interest rates has been aiding domestic-focused capital-intensive companies to get funds at low costs to carry on with infrastructure strengthening work.

Per the National Oceanic and Atmospheric Administration release, the December contiguous U.S. temperature was 39.3 degrees F, 6.7 degrees above average, making it the warmest December on record. No doubt, warmer-than-normal weather conditions in December 2021 are likely to have adversely impacted the demand for utility services.

Despite the threat of the new variant of COVID-19, the overall improvement in economic conditions in the United States and the restart of commercial and industrial activities have been creating fresh demand for utility services. The increasing customer base of the utilities is expected to have boosted their fourth-quarter performance.

Per the current Earnings Trends report, the utility sector’s fourth-quarter earnings are expected to decline 1.5%, while revenues are estimated to improve 10.5%. Let’s take a sneak peek into how the following utility stocks are poised prior to their fourth-quarter earnings on Feb 22.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

American State Water’s (AWR Quick QuoteAWR - Free Report) fourth-quarter earnings are likely to have benefited from contributions from the Contracted Services business due to a decline in operating expenses. Yet, an increase in operating expenses in its Electric utility segment may have been a concern.

Our proven model predicts an earnings beat for American State Water this time around. It has an Earnings ESP of 0.00% and a Zacks Rank of 3.