New York-based Consolidated Edison, Inc. (ED Quick QuoteED - Free Report) is set to release second-quarter 2016 results after the closing bell on Aug 4. Last quarter, the company delivered a negative earnings surprise of 3.28%. Let’s see how things are shaping up prior to this announcement.

Factors at Play

Consolidated Edison follows a systematic capital investment plan for infrastructure development and has a robust capital expenditure plan of around $11.5 billion for the 2016–2018 time frame. Roughly 81.3% of the planned investment is allocated for regulated utility operations, while the rest goes to its competitive business. It expects 2016 earnings in the range of $3.85 to $4.05 per share.

Meanwhile, Consolidated Edison has gradually been converting some of its operations to gas, which is safer for the environment. The company has, in fact, been investing steadily in its renewable generation assets. Its renewable investments in 2016 comprise an allocation of $3,168 million for energy delivery systems and $985 million for renewable electric production projects. Going forward, the company has set aside $1.7 billion for renewable and energy infrastructure projects through the 2016–2018 period.

In Jun 2016, Consolidated Edison announced that it has completed the formation of a joint venture to own and develop Crestwood Equity Partners LP's existing natural gas pipeline and storage business, located in southern New York and the northern Pennsylvania region. These initiatives would help the company expand and diversify energy resources, while encouraging competitive pricing for consumers.

For the second quarter, the Zacks Consensus Estimate for earnings reflects a 5.8% year-over-year decline, while sales are anticipated to be up 2.5% to $2.86 billion.

However, disruption in the wholesale energy markets, stringent utility regulations and interruption in operation of its generating units could be detrimental for Consolidated Edison’s growth.

Earnings Whispers

Our proven model does not conclusively show that Consolidated Edison 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 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.

Zacks ESP: Consolidated Edison has an Earnings ESP 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 73 cents.

Zacks Rank: Consolidated Edison’s Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult.

We note that Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few operators in the electric utility space worth considering, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Pattern Energy Group Inc. has an Earnings ESP of +100.00% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Aug 8.

AES Corporation (AES Quick QuoteAES - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3. The company will report second-quarter results on Aug 5.

Avista Corp. (AVA Quick QuoteAVA - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2. The company will report second-quarter results on Aug 3.

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