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Key Predictions for Q3 Earnings Reports of EXC, LNT, ED, AES
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The third-quarter earnings season has already passed the half way mark. Total earnings for the 272 S&P members that have released results till now, are up 8.7% year over year on 6.7% higher revenues, with 75.7% beating earnings and 66.2% topping revenue estimates.
This is going to be another busy week with 900 companies expected to release earnings including 134 members of the S&P 500. Combining the results of the 272 S&P 500 members with the index’s 228 members yet to report, we expect total earnings to be up 5.4% year over year on 5.5% higher revenues.
Amid this backdrop, let us focus on Zacks Utilities sector this earnings season. Earnings from the utility space are expected to drop 5.1%. Notably, at present, 10 out of the 16 sectors in the Zacks coverage universe are expected to witness an earnings decline. Read more details in our weekly Earnings Preview
Capital intensive utilities are impacted by rise in interest rates in twice in this year — in March and June. In addition, the hurricanes also adversely impacted the utilities operating in Texas and Florida.
With the rising interest rates, the stable, regular dividend payer utilities will face strong competition from bonds as these provide higher returns, which will make them a more attractive option for investors.
To maintain their performance level, these utilities are resorting to cost savings initiatives, modernizing transmission and distribution lines, upgrading infrastructure and also focusing more on renewables energy to produce electricity to lower emission.
Let us take a sneak peek at the four utility stocks scheduled to release third-quarter 2017 earnings on Nov 2.
Exelon expects its third-quarter earnings to be 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.
For the quarter, the Zacks Consensus Estimate for Exelon’s revenues is pegged at $9,085 million, indicating 0.9% year-over-year and 19.2% sequential increase. 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.
Exelon’s Earnings ESP is +0.48%. This is because the Most Accurate estimate of 87 cents is higher than the Zacks Consensus Estimate of 86 cents. According to our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 have higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
Alliant Energy Corporation (LNT - Free Report) pulled off a positive earnings surprise of 5.13% in the previous quarter. The company currently carries a Zacks Rank #4 (Sell).
Alliant Energy’s earnings are expected to gain from its robust capital expenditure plans and constructive regulatory decisions. The progress already made by the company in its wind generation expansion plans will aid in meeting its long-term earnings growth objective of 5% to 7%.
The Zacks Consensus Estimate for third-quarter earnings per share is 85 cents, which reflects year-over-year growth of 6.25%. The new electric rates which became effective from 2017 have helped the company increase earnings.
Consolidated Edison (ED - Free Report) delivered a negative earnings surprise of 4.92% in the second quarter. The company currently carries a Zacks Rank #3.
Consolidated Edison has been investing to enhance its renewable generation assets of late. In the previous quarter, the company’s renewable energy production volumes improved 46.1%, leading to an increase of $36 million in renewable revenues.
In August, the company announced that its installation plans of solar panels on company roofs and grounds have been approved. Under the initial phase of this strategy, Consolidated Edison expects to generate 3 megawatts of power through the installation that will serve 800 to 1,600 customers, primarily in Brooklyn, Queens and Westchester County.
The third-quarter’s results are expected to benefit from this initiative. Also, further updates on progress of the same are expected to come when the company reports its quarterly numbers.
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings reflects a rise of 0.7% year over year, whereas sales are anticipated to drop 7.8% to $3.14 billion.
Consolidated Edison’s Earnings ESP is -0.22%. Hence, the company is unlikely to beat earnings as it does not have the right combination of the two key ingredients (read more: What's in Store for Consolidated Edison in Q3 Earnings?).
The AES Corporation (AES - Free Report) pulled off a positive earnings surprise of 19.05% in the previous quarter. The company currently carries a Zacks Rank #4.
For the to-be reported quarter, the Zacks Consensus Estimate for earnings is projected to move down 8.3% while the same for revenues is estimated to remain flat on a year-over-year basis.
The recent hurricanes impacted operation of the company in Puerto Rico and the U.S. Virgin Islands. The company expects an adverse impact of 3-5 cents on earnings due to the unplanned outages.
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Key Predictions for Q3 Earnings Reports of EXC, LNT, ED, AES
The third-quarter earnings season has already passed the half way mark. Total earnings for the 272 S&P members that have released results till now, are up 8.7% year over year on 6.7% higher revenues, with 75.7% beating earnings and 66.2% topping revenue estimates.
This is going to be another busy week with 900 companies expected to release earnings including 134 members of the S&P 500. Combining the results of the 272 S&P 500 members with the index’s 228 members yet to report, we expect total earnings to be up 5.4% year over year on 5.5% higher revenues.
Amid this backdrop, let us focus on Zacks Utilities sector this earnings season. Earnings from the utility space are expected to drop 5.1%. Notably, at present, 10 out of the 16 sectors in the Zacks coverage universe are expected to witness an earnings decline. Read more details in our weekly Earnings Preview
Capital intensive utilities are impacted by rise in interest rates in twice in this year — in March and June. In addition, the hurricanes also adversely impacted the utilities operating in Texas and Florida.
With the rising interest rates, the stable, regular dividend payer utilities will face strong competition from bonds as these provide higher returns, which will make them a more attractive option for investors.
To maintain their performance level, these utilities are resorting to cost savings initiatives, modernizing transmission and distribution lines, upgrading infrastructure and also focusing more on renewables energy to produce electricity to lower emission.
Let us take a sneak peek at the four utility stocks scheduled to release third-quarter 2017 earnings on Nov 2.
Exelon Corporation (EXC - Free Report) surpassed earnings estimates in the previous two quarters, resulting in an average beat of 5.20%. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Exelon expects its third-quarter earnings to be 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.
For the quarter, the Zacks Consensus Estimate for Exelon’s revenues is pegged at $9,085 million, indicating 0.9% year-over-year and 19.2% sequential increase. 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.
Exelon Corporation Price and EPS Surprise
Exelon Corporation Price and EPS Surprise | Exelon Corporation Quote
Exelon’s Earnings ESP is +0.48%. This is because the Most Accurate estimate of 87 cents is higher than the Zacks Consensus Estimate of 86 cents. According to our proven model, stocks with the combination of a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or 3 have higher chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter
The company is likely to beat earnings because it has the right combination of the two key ingredients (read more: Will Exelon Keep the Earnings Streak Alive in Q3?).
Alliant Energy Corporation (LNT - Free Report) pulled off a positive earnings surprise of 5.13% in the previous quarter. The company currently carries a Zacks Rank #4 (Sell).
Alliant Energy’s earnings are expected to gain from its robust capital expenditure plans and constructive regulatory decisions. The progress already made by the company in its wind generation expansion plans will aid in meeting its long-term earnings growth objective of 5% to 7%.
The Zacks Consensus Estimate for third-quarter earnings per share is 85 cents, which reflects year-over-year growth of 6.25%. The new electric rates which became effective from 2017 have helped the company increase earnings.
Alliant Energy Corporation Price and EPS Surprise
Alliant Energy Corporation Price and EPS Surprise | Alliant Energy Corporation Quote
Alliant Energy’s Earnings ESP is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 85 cents.
Hence, the company is unlikely to beat earnings as it does not have the right combination of the two key ingredients (read more: What’s in Store for Alliant Energy in Q3 Earnings?).
Consolidated Edison (ED - Free Report) delivered a negative earnings surprise of 4.92% in the second quarter. The company currently carries a Zacks Rank #3.
Consolidated Edison has been investing to enhance its renewable generation assets of late. In the previous quarter, the company’s renewable energy production volumes improved 46.1%, leading to an increase of $36 million in renewable revenues.
In August, the company announced that its installation plans of solar panels on company roofs and grounds have been approved. Under the initial phase of this strategy, Consolidated Edison expects to generate 3 megawatts of power through the installation that will serve 800 to 1,600 customers, primarily in Brooklyn, Queens and Westchester County.
Consolidated Edison Inc Price and EPS Surprise
Consolidated Edison Inc Price and EPS Surprise | Consolidated Edison Inc Quote
The third-quarter’s results are expected to benefit from this initiative. Also, further updates on progress of the same are expected to come when the company reports its quarterly numbers.
For the to-be-reported quarter, the Zacks Consensus Estimate for earnings reflects a rise of 0.7% year over year, whereas sales are anticipated to drop 7.8% to $3.14 billion.
Consolidated Edison’s Earnings ESP is -0.22%. Hence, the company is unlikely to beat earnings as it does not have the right combination of the two key ingredients (read more: What's in Store for Consolidated Edison in Q3 Earnings?).
The AES Corporation (AES - Free Report) pulled off a positive earnings surprise of 19.05% in the previous quarter. The company currently carries a Zacks Rank #4.
For the to-be reported quarter, the Zacks Consensus Estimate for earnings is projected to move down 8.3% while the same for revenues is estimated to remain flat on a year-over-year basis.
The recent hurricanes impacted operation of the company in Puerto Rico and the U.S. Virgin Islands. The company expects an adverse impact of 3-5 cents on earnings due to the unplanned outages.
The AES Corporation Price and EPS Surprise
The AES Corporation Price and EPS Surprise | The AES Corporation Quote
AES Corporation’s Earnings ESP is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 29 cents.
Hence, the company is unlikely to beat earnings as it does not have the right combination of the two key ingredients (read more: Is AES Corp Likely to Disappoint This Earnings Season?).
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>