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2 Utility Stocks to Report Earnings on Oct 26: WEC and DTE
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The Q3 earnings season is picking up pace and we have seen earnings releases by 116 S&P 500 members so far. Reported earnings were up 3.3% year over year on 1.8% higher revenues. This may well be one of the busiest weeks of this earnings season, with 810 companies (including 171 S&P members) lining up to release financial results.
For the remaining index members, 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 could be the first quarter to record positive earnings growth after five quarters of back-to-back declines.
With this in the backdrop, let’s focus on the utility sector, which is characterized by its defensive nature and domestic orientation.
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. Per recent projections by the U.S. Energy Information Administration (EIA), the share of natural gas in the electricity generation mix will increase to nearly 35% in 2016, reflecting growing preference for the fuel.
Seven out of the 16 sectors in the Zacks coverage universe are expected to witness earnings decline this season. However, utility is among the remaining nine sectors that are expected to record growth in the positive territory this season. Read more details in our weekly Earnings Preview report.
The Utility Sector
This sector is known for its capital-intensive nature. This is because these companies need huge capital for setting up generation facilities, and transmission and distribution infrastructure. They also require funds for upgrading the existing systems to meet emission control standards.
Because of their capital-intensive nature, utilities have been benefiting from the rock-bottom interest rate environment. However, talks hinting at a rate hike before the end of the year could hamper the growth momentum of the sector. Nevertheless, we expect warmer-than-normal weather in the U.S. during the third quarter to boost sales to a considerable extent.
In the third quarter of 2016, sector earnings are expected to be up 5.7% on 4.6% higher revenues.
Let’s focus on a couple of utilities that are scheduled to report quarterly numbers on Oct 26.
WEC Energy’s Earnings ESP, which represents the difference between the Most Accurate estimate of 62 cents and the Zacks Consensus Estimate of 59 cents, stands at +5.09%. 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: WEC Energy Likely to Beat Estimates in Q3 Earnings)
DTE Energy (DTE - Free Report) , another Zacks Rank #2 stock, reported a negative earnings surprise of 8.89% in the previous quarter.
The company has an Earnings ESP of +4.64% as the Most Accurate estimate is pegged at $1.58, while the Zacks Consensus Estimate stands at $1.51. (Read more: DTE Energy to Report Q3 Earnings: Stock to Beat?)
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
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This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today's Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here>>
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2 Utility Stocks to Report Earnings on Oct 26: WEC and DTE
The Q3 earnings season is picking up pace and we have seen earnings releases by 116 S&P 500 members so far. Reported earnings were up 3.3% year over year on 1.8% higher revenues. This may well be one of the busiest weeks of this earnings season, with 810 companies (including 171 S&P members) lining up to release financial results.
For the remaining index members, 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 could be the first quarter to record positive earnings growth after five quarters of back-to-back declines.
With this in the backdrop, let’s focus on the utility sector, which is characterized by its defensive nature and domestic orientation.
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. Per recent projections by the U.S. Energy Information Administration (EIA), the share of natural gas in the electricity generation mix will increase to nearly 35% in 2016, reflecting growing preference for the fuel.
Seven out of the 16 sectors in the Zacks coverage universe are expected to witness earnings decline this season. However, utility is among the remaining nine sectors that are expected to record growth in the positive territory this season. Read more details in our weekly Earnings Preview report.
The Utility Sector
This sector is known for its capital-intensive nature. This is because these companies need huge capital for setting up generation facilities, and transmission and distribution infrastructure. They also require funds for upgrading the existing systems to meet emission control standards.
Because of their capital-intensive nature, utilities have been benefiting from the rock-bottom interest rate environment. However, talks hinting at a rate hike before the end of the year could hamper the growth momentum of the sector. Nevertheless, we expect warmer-than-normal weather in the U.S. during the third quarter to boost sales to a considerable extent.
In the third quarter of 2016, sector earnings are expected to be up 5.7% on 4.6% higher revenues.
Let’s focus on a couple of utilities that are scheduled to report quarterly numbers on Oct 26.
WEC Energy Group (WEC - Free Report) reported a positive earnings surprise of 3.64% last quarter. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
WEC Energy’s Earnings ESP, which represents the difference between the Most Accurate estimate of 62 cents and the Zacks Consensus Estimate of 59 cents, stands at +5.09%. 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: WEC Energy Likely to Beat Estimates in Q3 Earnings)
WEC ENERGY GRP Price and EPS Surprise
WEC ENERGY GRP Price and EPS Surprise | WEC ENERGY GRP Quote
DTE Energy (DTE - Free Report) , another Zacks Rank #2 stock, reported a negative earnings surprise of 8.89% in the previous quarter.
The company has an Earnings ESP of +4.64% as the Most Accurate estimate is pegged at $1.58, while the Zacks Consensus Estimate stands at $1.51. (Read more: DTE Energy to Report Q3 Earnings: Stock to Beat?)
DTE ENERGY CO Price and EPS Surprise
DTE ENERGY CO Price and EPS Surprise | DTE ENERGY CO Quote
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Confidential from Zacks
This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today's Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here>>