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What Awaits Public Service Enterprise (PEG) in Q1 Earnings?

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Public Service Enterprise Group Inc. (PEG - Free Report) is scheduled to report first-quarter 2017 results before the opening bell on Apr 28.

Last quarter, the utility’s earnings surpassed the Zacks Consensus Estimate by 3.85%. Moreover, Public Service Enterprise outperformed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 3.69%.

Let’s see how things are shaping up for this announcement.

Factors at Play

During the fourth-quarter earnings call, Public Service Enterprise said that actions taken by the company to transition its business mix in response to changing market conditions had positively impacted its earnings and will continue to do so in the first quarter as well.

Again, during the first quarter, Public Service Enterprise announced that it has acquired two North Carolina solar facilities from BayWa r.e., with a total capacity of 47 megawatts (‘MW”), representing a total investment of $74.6 million. The company expects impact of these acquisitions to get reflected in the first-quarter results.

However, the company's service territories witnessed warmer-than-normal temperatures during the to-be-reported quarter. This will result in lower household expenditure on heating, which is expected to unfavorably impact revenues.

Overall, for the first quarter, the Zacks Consensus Estimate for earnings reflects a year-over-year decline of 7.25%, while revenues are pegged at $2.56 billion, portraying a decline of 1.99%.

Earnings Whispers

Our proven model does not conclusively show that Public Service Enterprise Group is likely to beat earnings this quarter. This 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. This is not the case here, as you will see below.

Zacks ESP: Public Service Enterprise Group has an Earnings ESP of -1.19% as the Most Accurate estimate is pegged at 83 cents, while the Zacks Consensus Estimate is a little higher at 84 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Public Service Enterprise Group’s Zacks Rank #3 when combined with negative ESP, makes surprise prediction difficult for the quarter.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Stocks to Consider

Here are a few stocks in the Utility space worth considering on the basis of our model, which shows that they have the right combination to pull off a beat:

NiSource, Inc. (NI - Free Report) will report first-quarter results on May 3. The company has an Earnings ESP of +3.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy Group, Inc. has an Earnings ESP of +300% and a Zacks Rank #3. The company is expected to report first-quarter results on May 8.

Pinnacle West Capital Corporation (PNW - Free Report) has an Earnings ESP of +7.14% and a Zacks Rank #3. The company is slated to release first-quarter results on May 2.

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