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Will Exelon (EXC) Keep the Earnings Streak Alive in Q3?

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We expect Exelon Corporation (EXC - Free Report) to pull off a positive earnings surprise, when it reports third-quarter 2017 earnings on Nov 2. The Utility has surpassed earnings estimates in the previous two quarters, resulting in an average beat of 5.20%.

Why a Likely Positive Surprise?

Our proven model shows that Exelon is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates and the company has the right mix.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate of 87 cents and the Zacks Consensus Estimate of 86 cents, is +0.48 %. This is a meaningful and leading indicator of a likely positive surprise.

Zacks Rank: Exelon currently carries a Zacks Rank #3. The combination a favorable Zacks Rank and positive ESP makes us reasonably confident of a positive surprise this season.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Exelon Corporation Price and EPS Surprise
 

Exelon Corporation Price and EPS Surprise | Exelon Corporation Quote

Factors to Consider

Exelon expects its third-quarter earnings to be in the range between 80 cents and 90 cents per share, which takes into account a full quarter of contributions from the New York ZEC program that started on Apr 1.

We believe that the Delmarva new electric and gas rate approval, along with Pepco DC rate case during the quarter will have a positive impact on Exelon’s total revenues in the second half of 2017.

As free cash flow generation capacity is helping Exelon to lower its long-term debt, we expect its outstanding debts to drop further in the second half of 2017. The first-half debt level was $30.3 billion, declining nearly $1.2 billion from 2016 end levels.  

Other Stocks to Consider
 
Exelon is not the only stock in the Zacks Utility Power industry that is expected to report a positive earnings surprise. Investors can also consider the following stocks from the same space this season.

NiSource Inc. (NI - Free Report) is expected to report third-quarter earnings on Nov 1. The company has a Zacks Rank #2 and an Earnings ESP of +7.84%. You can see the complete list of today’s Zacks #1 Rank stocks here.

ALLETE Inc. (ALE - Free Report) is expected to report third-quarter earnings on Nov 1. The company has a Zacks Rank #2 and an Earnings ESP of +1.89%.

Avista Corporation (AVA - Free Report) is expected to report third-quarter earnings on Nov 1. The company has a Zacks Rank #3 and an Earnings ESP of +2.63%.

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