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Xcel Energy (XEL) Q3 Earnings: What's Ahead for the Stock?

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Xcel Energy Inc. (XEL - Free Report) will release third-quarter 2016 financial results before the market opens on Oct 27. Last quarter, this electric and natural gas utility’s earnings recorded a negative earnings surprise of 4.88%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider

Above-average temperatures in its service territories in the third quarter are expected drive top-line growth. Further, the company is confident that its cost management initiatives will pay off in the quarter.

Moreover, unemployment rates lower than the national average in its service territories indicate improving economic fundamentals, which is expected to add to Xcel Energy’s top line.

XCEL ENERGY INC Price and EPS Surprise

 

XCEL ENERGY INC Price and EPS Surprise | XCEL ENERGY INC Quote

Earnings Whispers

Our proven model does not conclusively show that Xcel Energy is likely to beat earnings 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. Unfortunately, that is not the case here, as you will see below.

Zacks ESP: The company has an Earnings ESP of -1.14% because the Most Accurate estimate stands at 87 cents while the Zacks Consensus Estimate is pegged at 88 cents.

Zacks Rank: Though Xcel Energy’s Zacks Rank #2 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) 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 on the basis of our model, as they have the right combination of elements to post an earnings beat this quarter:

CMS Energy Corp. (CMS - Free Report) scheduled to report earnings on Oct 27. It is has an Earnings ESP of +5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Avista Corp. (AVA - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #2. It is slated to report earnings on Nov 1.

DTE Energy Company (DTE - Free Report) has an Earnings ESP of +4.64% and a Zacks Rank #2. It is slated to report earnings on Oct 26.

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