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Utility Stocks' Q1 Earnings Due on May 2: PNW, NI & More

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The Q1 earnings season is past the halfway mark, with 267 S&P 500 members having already reported their quarterly results as of Apr 27. Going by the positive trends, the first quarter is poised to record the strongest earnings and revenue growth in seven years. Earnings for the S&P 500 members that have already reported are up 25.1% from the same period last year on 10.0% higher revenues, with 76.8% beating EPS estimates and 73.8% surpassing revenues.

Per our latest Earnings Preview report, overall earnings in the first quarter for all the S&P 500 members are expected to be up 22.6% on 8.4% growth in revenues.

Amid the positive earnings outlook for the first quarter, let’s concentrate on the domestic-focused matured Zacks Utility sector. This sector, along with 14 of the 16 Zacks sectors, is likely to come up with improved year-over-year earnings. Currently, only the Autos sector is likely to register an earnings decline.

The Utility sector’s earnings are expected to increase 13.9% year over year on 1.4% growth in revenues, thanks to stable performance by most of the utilities. The need for heating, stemming from cold weather conditions, and increased demand for electricity aided the utilities. Additionally, tax reforms also helped the utilities in lowering their tax burden substantially.

Utilities, apart from investing in generating plants that produce electricity with low and negligible amount of emissions, are also focused on improving and upgrading transmission and distribution networks. Utilities are also investing in power storage facilities and guiding investors for efficient usage of electricity.  

However, the rate-sensitive capital-intensive utility stocks are also accommodating the rate hikes. Notably, the Fed rate has now been raised for the sixth time (latest in March 2018) since the first hike in December 2015.

Let’s take a look at the Utility stocks, scheduled to report first-quarter 2018 earnings on May 2and see how things are shaping up for the upcoming results.

Pinnacle West Capital Corporation (PNW - Free Report) delivered a positive earnings surprise of 90% in the last reported quarter. Solid job growth rate in the Metro Phoenix area and increase in customer volume are likely to boost results in the quarter to be reported. (Read more: What to Expect From Pinnacle West in Q1 Earnings?)

 

Pinnacle West Capital has an Earnings ESP of -14.06% and a Zacks Rank #3 (Hold), which is not a favorable case for positive earnings surprise this season. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 to beat estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.

NiSource Inc. (NI - Free Report) delivered a positive earnings surprise of 3.13% in the last reported quarter. The company refinanced $1 billion of long-term debts at more favorable rates, which will lower its capital costs and expansion in gas customer base are expected to have aided demand. (Read more: Will NiSource Gain From Debt Financings in Q1 Earnings?)

 

NiSource, Inc Price and EPS Surprise

 

NiSource, Inc Price and EPS Surprise | NiSource, Inc Quote

 

NiSource has an Earnings ESP of -0.39% and a Zacks Rank #3, making earnings surprise prediction uncertain this season.

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) delivered a negative earnings surprise of 13.16% in the last reported quarter. The progress made by the company in its wind-generation expansion plans and electricity generation from natural gas plans  is expected to aid the company meet its earnings growth objective of 5-7%.( Read more: What's in Store for Alliant Energy in Q1 Earnings?)

 

Alliant Energy has an Earnings ESP of 0.00% and a Zacks Rank #2, making earnings surprise prediction difficult.

Southern Company (SO - Free Report) delivered a positive earnings surprise of 10.87% in the last reported quarter. We expect strong rate base growth and AGL Resources’ acquisition to be accretive to Southern Company’s earnings. (Read more: What Lies Ahead for Southern Company in Q1 Earnings?)


Southern Company (The) Price and EPS Surprise

 

Southern Company (The) Price and EPS Surprise | Southern Company (The) Quote

 

Southern Company has an Earnings ESP of -0.40% and a Zacks Rank #3,making earnings surprise prediction difficult.

Exelon Corporation (EXC - Free Report) delivered a negative earnings surprise of 11.29% in the last reported quarter. The rate hikes received from Commonwealth Edison Company, effective Jan 1, 2018, will have a positive impact on Exelon’s performance. (Read more: Can Exelon Ride on Rate Hike This Earnings Season?)

 

Exelon Corporation Price and EPS Surprise

 

Exelon Corporation Price and EPS Surprise | Exelon Corporation Quote

 

Exelon has an Earnings ESP of -0.47% and a Zacks Rank #3,making earnings surprise prediction difficult.

Eversource Energy (ES - Free Report) delivered a negative earnings surprise of 1.32% in the previous quarter. Eversource Energy’s earnings will benefit from Aquarion earnings, electric distribution rate increases, and lower operation and maintenance expenses. (Read more: What to Expect From Eversource This Earnings Season?)

 

Eversource Energy Price and EPS Surprise

 

Eversource Energy Price and EPS Surprise | Eversource Energy Quote

 

Eversource Energy has an Earnings ESP of -0.39% and a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

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