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WEC Energy (WEC) Q2 Earnings: Stock to Pull a Surprise?

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WEC Energy Group Inc. (WEC - Free Report) will release second-quarter 2016 financial results before the market opens on Jul 27. Last quarter, this diversified utility’s earnings beat the Zacks Consensus Estimate by 6.86%. Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider

WEC Energy has plans to strengthen its infrastructure and it expects to register earnings growth of 6% to 8% this year. Integration of Integrys Energy and improving economic conditions in the company’s service territories are expected to aid the bottom line as well. The company generates nearly 99% of its earnings from regulated operations, which creates excellent earnings visibility.

For the second quarter, WEC Energy expects earnings per share to be in the range of 51–55 cents, assuming normal weather patterns. However, second-quarter earnings are expected to fall from the first-quarter 2016 levels due to low gas heating margins. Although a relatively cooler weather this April drove gas sales, the increase will be more than offset by the lack of need for air-conditioning in commercial industrial buildings, resulting to lower electric sales.

WEC ENERGY GRP Price and EPS Surprise

WEC ENERGY GRP Price and EPS Surprise | WEC ENERGY GRP Quote

Earnings Whispers

Our proven model does not conclusively show that WEC Energy is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But, that is not the case here, as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 53 cents, resulting in an Earnings ESP of 0.00%.

Zacks Rank: Though WEC Energy’s Zacks Rank #3 increases the predictive power of the ESP, its 0.00% ESP makes a beat uncertain this quarter.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks in the utility space worth considering as our model shows that thy have the right combination of elements to beat estimates this quarter:

DTE Energy Company (DTE - Free Report) has an Earnings ESP of +2.20% and a Zacks Rank #2. It is scheduled to report earnings on Jul 26.

NRG Energy, Inc (NRG - Free Report) has an Earnings ESP of +228.00% and a Zacks Rank #3. It is expected to report earnings on Aug 2.

Pattern Energy Group Inc. has an Earnings ESP of +100.00% and a Zacks Rank #2. It is expected to report earnings on Aug 8.

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