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Utility Stocks to Watch for Earnings on Oct 25: AGR, ETR
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The Q3 earnings season is underway with 116 S&P 500 members having released their quarterly numbers. Reported earnings were up 3.3% year over year on a 1.8% increase in revenues. With this in the backdrop, let’s focus on the utility sector, which is characterized by its defensive nature and domestic orientation.
Per a recent report by the U.S. Energy Information Administration (EIA), the share of natural gas in the electricity generation mix is projected to increase to nearly 35% in 2016, reflecting growing preference for the fuel. Stringent emission control laws have spurred the demand for clean burning sources of energy like natural gas and renewables, lowering the usage of coal in electricity production.
This is expected to be one of the busiest weeks of this earnings season, with 810 companies (including 171 S&P members) lined up to release financial results.
For the remaining S&P 500 releases, the projections are of a 0.1% improvement in earnings on 1.5% higher revenues despite the expectations of a 72.6% plunge in earnings on 12.2% deterioration in revenues for the energy space. Notably, this is on track to be the first quarter to record positive earnings growth after five quarters of back-to-back declines.
Seven out of the 16 sectors in the Zacks coverage universe are expected to witness an earnings decline this earnings season. Read more details from our weekly Earnings Preview report.
The Utility Space
Because of their capital-intensive nature, utilities have been benefiting from the rock-bottom interest rate environment. Moreover, warmer-than-normal weather in the U.S. during the third quarter should give a boost to sales. However, talks hinting at a rate hike before the end of the year could hamper the growth momentum of the sector.
During the third quarter, earnings at the utility sector are expected to be up 5.7% on 4.6% higher revenues.
Let’s focus on a couple of utilities scheduled to report quarterly results on Oct 25.
Entergy’s Earnings ESP, which represents the difference between the Most Accurate estimate of $2.01 and the Zacks Consensus Estimate of $1.86, stands at +8.07%. According to our proven model, stocks with the combination of a Zacks Rank #1 (Strong Buy) #2 (Buy) or #3 (Hold) and a positive ESP are likely to beat estimates. (Read more: Entergy Q3 Earnings: Stock Likely to Beat Estimates?)
Avangrid, Inc. (AGR - Free Report) , a Zacks Rank #4 (Sell) stock, reported a negative earnings surprise of 36.00% in the previous quarter.
The company has an Earnings ESP of +8.33% as the Most Accurate estimate is pegged at 65 cents, while the Zacks Consensus Estimate stands at 60 cents. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement.
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
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Utility Stocks to Watch for Earnings on Oct 25: AGR, ETR
The Q3 earnings season is underway with 116 S&P 500 members having released their quarterly numbers. Reported earnings were up 3.3% year over year on a 1.8% increase in revenues. With this in the backdrop, let’s focus on the utility sector, which is characterized by its defensive nature and domestic orientation.
Per a recent report by the U.S. Energy Information Administration (EIA), the share of natural gas in the electricity generation mix is projected to increase to nearly 35% in 2016, reflecting growing preference for the fuel. Stringent emission control laws have spurred the demand for clean burning sources of energy like natural gas and renewables, lowering the usage of coal in electricity production.
This is expected to be one of the busiest weeks of this earnings season, with 810 companies (including 171 S&P members) lined up to release financial results.
For the remaining S&P 500 releases, the projections are of a 0.1% improvement in earnings on 1.5% higher revenues despite the expectations of a 72.6% plunge in earnings on 12.2% deterioration in revenues for the energy space. Notably, this is on track to be the first quarter to record positive earnings growth after five quarters of back-to-back declines.
Seven out of the 16 sectors in the Zacks coverage universe are expected to witness an earnings decline this earnings season. Read more details from our weekly Earnings Preview report.
The Utility Space
Because of their capital-intensive nature, utilities have been benefiting from the rock-bottom interest rate environment. Moreover, warmer-than-normal weather in the U.S. during the third quarter should give a boost to sales. However, talks hinting at a rate hike before the end of the year could hamper the growth momentum of the sector.
During the third quarter, earnings at the utility sector are expected to be up 5.7% on 4.6% higher revenues.
Let’s focus on a couple of utilities scheduled to report quarterly results on Oct 25.
Entergy Corporation (ETR - Free Report) reported a positive earnings surprise of 201.94% last quarter. The company currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Entergy’s Earnings ESP, which represents the difference between the Most Accurate estimate of $2.01 and the Zacks Consensus Estimate of $1.86, stands at +8.07%. According to our proven model, stocks with the combination of a Zacks Rank #1 (Strong Buy) #2 (Buy) or #3 (Hold) and a positive ESP are likely to beat estimates. (Read more: Entergy Q3 Earnings: Stock Likely to Beat Estimates?)
ENTERGY CORP Price and EPS Surprise
ENTERGY CORP Price and EPS Surprise | ENTERGY CORP Quote
Avangrid, Inc. (AGR - Free Report) , a Zacks Rank #4 (Sell) stock, reported a negative earnings surprise of 36.00% in the previous quarter.
The company has an Earnings ESP of +8.33% as the Most Accurate estimate is pegged at 65 cents, while the Zacks Consensus Estimate stands at 60 cents. Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement.
AVANGRID INC Price and EPS Surprise
AVANGRID INC Price and EPS Surprise | AVANGRID INC Quote
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>