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Utility Stock Q4 Earnings Slated on Feb 24: PEG, PNW, SJI
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We are fast approaching the end of fourth-quarter reporting cycle, with earnings from 411 of the S&P 500 members already out as of Feb 17. So far, the results have been good with earnings from 411 index members up 8% on the back of 4.9% higher revenues.
Taking into account the remaining 17.8% of the index members, the overall S&P 500 earnings are expected to be up 7.4% on 3.9% higher revenues, with growth expected in the positive territory for 12 of the 16 Zacks sectors. This quarter is on track to become the second quarter of positive growth following five quarters of back-to-back decline. Read more details in the latest Earnings Preview.
Against this positive backdrop, let us concentrate on the domestic focused mature Utility sector. Only 50% of the Utilities in the S&P 500 group have reported their earnings as of Feb 17, 2017. Earnings of these companies are up 18.1% on 7.9% higher revenues.
The regulated nature of operation and domestic focus keep the utilities insulated from foreign currency fluctuation, which is a serious concern for a few other sectors. Additionally, utility services like electricity and water are yet to have any viable alternative. Consequently, this assures steady demand for the services rendered by utility operators.
Utility operation is capital-intensive and the companies need to approach capital markets for funds. So, the rock-bottom interest rates that prevailed in the U.S. for nearly a decade acted as a tailwind for this sector. Finally, the interest rates were revised upward in Dec 2015 and were raised once again in Dec 2016. Further, the Fed Reserve also announced its intention of increasing interest rates for three more times this year if economic conditions are favorable. This does not augur well for utilities.
Trump’s presidency is expected to benefit defensive and domestic-oriented utilities immensely, though conventional wisdom runs counter to this view in light of underperformance of high-dividend stocks against the backdrop of a rising interest rate.
During Trump’s election campaign, he had vowed to lower the regulatory pressure on domestic manufacturers and suggested increased investment in energy infrastructure. If the new administration indeed starts working on these lines, the utility sector is bound to get a boost.
In the fourth quarter of 2016, utility sector earnings are expected to be up 6.1% on 15.5% higher revenues.
Let’s focus on a few utilities that are scheduled to report fourth-quarter numbers on Feb 24.
Public Service Enterprise Group’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.92%. This is because the Most Accurate estimate is pegged at 53 cents, while the Zacks Consensus Estimate stands at 52 cents.
South Jersey Industries, Inc. reported a positive earnings surprise of 141.67% last quarter. The company currently carries a Zacks Rank #3.
It has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 41 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
South Jersey Industries, Inc. Price and EPS Surprise
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Utility Stock Q4 Earnings Slated on Feb 24: PEG, PNW, SJI
We are fast approaching the end of fourth-quarter reporting cycle, with earnings from 411 of the S&P 500 members already out as of Feb 17. So far, the results have been good with earnings from 411 index members up 8% on the back of 4.9% higher revenues.
Taking into account the remaining 17.8% of the index members, the overall S&P 500 earnings are expected to be up 7.4% on 3.9% higher revenues, with growth expected in the positive territory for 12 of the 16 Zacks sectors. This quarter is on track to become the second quarter of positive growth following five quarters of back-to-back decline. Read more details in the latest Earnings Preview.
Against this positive backdrop, let us concentrate on the domestic focused mature Utility sector. Only 50% of the Utilities in the S&P 500 group have reported their earnings as of Feb 17, 2017. Earnings of these companies are up 18.1% on 7.9% higher revenues.
The regulated nature of operation and domestic focus keep the utilities insulated from foreign currency fluctuation, which is a serious concern for a few other sectors. Additionally, utility services like electricity and water are yet to have any viable alternative. Consequently, this assures steady demand for the services rendered by utility operators.
Utility operation is capital-intensive and the companies need to approach capital markets for funds. So, the rock-bottom interest rates that prevailed in the U.S. for nearly a decade acted as a tailwind for this sector. Finally, the interest rates were revised upward in Dec 2015 and were raised once again in Dec 2016. Further, the Fed Reserve also announced its intention of increasing interest rates for three more times this year if economic conditions are favorable. This does not augur well for utilities.
Trump’s presidency is expected to benefit defensive and domestic-oriented utilities immensely, though conventional wisdom runs counter to this view in light of underperformance of high-dividend stocks against the backdrop of a rising interest rate.
During Trump’s election campaign, he had vowed to lower the regulatory pressure on domestic manufacturers and suggested increased investment in energy infrastructure. If the new administration indeed starts working on these lines, the utility sector is bound to get a boost.
In the fourth quarter of 2016, utility sector earnings are expected to be up 6.1% on 15.5% higher revenues.
Let’s focus on a few utilities that are scheduled to report fourth-quarter numbers on Feb 24.
Public Service Enterprise Group Incorporated’s (PEG - Free Report) earnings surpassed the Zacks Consensus Estimate by 8.64% last quarter. Public Service Enterprise Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Public Service Enterprise Group’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.92%. This is because the Most Accurate estimate is pegged at 53 cents, while the Zacks Consensus Estimate stands at 52 cents.
According to our proven model, stocks with the combination of a Zacks Rank #1, 2 (Buy) or 3 and a positive ESP have high chances of beating estimates. (Read more: Public Service Enterprise: What's Up for Q4 Earnings?)
Public Service Enterprise Group Incorporated Price and EPS Surprise
Public Service Enterprise Group Incorporated Price and EPS Surprise | Public Service Enterprise Group Incorporated Quote
Pinnacle West Capital Corporation (PNW - Free Report) posted a negative earnings surprise of 2.49% last quarter. Pinnacle West has a Zacks Rank #2.
Pinnacle West’s Earnings ESP is +2.04% as the Most Accurate estimate is pegged at 50 cents, while the Zacks Consensus Estimate stands at 49 cents. (Read more: Pinnacle West: Will it Post an Earnings Beat in Q4?)
Pinnacle West Capital Corporation Price and EPS Surprise
Pinnacle West Capital Corporation Price and EPS Surprise | Pinnacle West Capital Corporation Quote
South Jersey Industries, Inc. reported a positive earnings surprise of 141.67% last quarter. The company currently carries a Zacks Rank #3.
It has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 41 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
South Jersey Industries, Inc. Price and EPS Surprise
South Jersey Industries, Inc. Price and EPS Surprise | South Jersey Industries, 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 >>