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Utility Stock Earnings to Watch on Oct 28: CPN, POR & PNM

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The Q3 earnings season is picking up pace with 116 S&P 500 members having already reported their results last week. Reported earnings were up 3.3% year over year on 1.8% higher revenues. This will probably be one of the busiest weeks of the Q3 earnings season, with 810 companies (including 171 S&P members) releasing 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 Oil & Energy sector. Notably, this could 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 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

Let us now focus on the utility sector, which is characterized by its defensive nature and domestic orientation.

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 considerable 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 large extent.

In the third quarter of 2016, sector earnings are expected to be up 5.7% on 4.6% higher revenues. Exelon Corporation (EXC - Free Report) , a large operator in the utility space, recently reported better-than-expected bottom-line numbers for the third quarter of 2016. Reported quarterly earnings exceeded expectations by a substantial 23% mainly on the back of regulatory rate hikes and favorable weather, which drove the demand for utility services.

Let’s take a look at a few utilities that are scheduled to report quarterly numbers on Oct 28.

Portland General Electric Company (POR - Free Report) is involved in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. The stock carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Portland General Electric’s Earnings ESP, which represents the difference between the Most Accurate estimate of 38 cents and the Zacks Consensus Estimate of 41 cents, is -7.32%. According to our proven model, stocks with the combination of a Zacks Rank #1, #2 (Buy) or #3 and a positive ESP have higher chances of beating earnings estimates. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

PORTLAND GEN EL Price and EPS Surprise

 

PORTLAND GEN EL Price and EPS Surprise | PORTLAND GEN EL Quote

PNM Resources, Inc. (PNM - Free Report) engages in the generation, transmission and distribution of electricity. The company reported a positive earnings surprise of 8.11% in the previous quarter.

PNM Resources’ Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 75 cents. However, the company has a Zacks Rank #4 (Sell) and we caution against Sell-rated stocks (#4 or #5) going into the earnings announcement.

PNM RESOURCES Price and EPS Surprise

 

PNM RESOURCES Price and EPS Surprise | PNM RESOURCES Quote

Calpine Corporation is a wholesale power generation company, which owns and operates natural gas and geothermal power plants in North America.

Calpine Corporation’s Earnings ESP is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 59 cents. However, this company holds a Zacks Rank #4 as well.

CALPINE CORP Price and EPS Surprise

 

CALPINE CORP Price and EPS Surprise | CALPINE CORP Quote

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