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Xcel Energy: Will it Miss?

by Zacks Equity Research

January 29, 2013 | Comments : 0 Recommended this article: (0)

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Xcel Energy ( XEL - Analyst Report ) will release its fourth quarter 2012 financial results before the market bell on Jan 31, 2013. In the prior quarter, this electric utility reported an earnings surprise of 8.33%. Xcel Energy currently has a Zacks Rank #3 (Hold). Let’s see how things are shaping up at Xcel Energy prior to this announcement.

Factors to Consider This Quarter

The company will continue to benefit from its ongoing cost saving measures thereby boosting margins. As per a report from the U.S. Energy Information Admistration, near normal winter weather in the U.S. is likely to provide some benefit to the utlities in the fourth quarter.

Xcel Energy produces nearly 80% of its electricity through coal and natural gas plants. The ongoing systematic capital investment will boost generation capabilities and enhance the reliability of its service.

Earnings Whispers

Our proven model does not conclusively show that Xcel Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read:Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here.

Zacks ESP: The Most Accurate estimate stands at 28 cents and the Zacks Consensus Estimate is also in line at 28 cents, resulting in 0.00% ESP.

Zacks Rank #3 (Hold): Xcel’s Zacks Rank #3 enhances the chances of a surprise; however the 0.00% ESP complicates the forecasting power making surprise prediction difficult.

We note that Xcel registered an earnings surprise in last three quarters. Even so we caution investors against the stock going into the earnings announcement, as a Zacks earnings ESP of 0.00% lowers the possibility of an earnings surprise.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that they have the right combination of elements to post an earnings beat this quarter are as follows:

Wisconsin Energy Corp. ( WEC - Analyst Report ) has earnings ESP of +2.38% and carries a Zacks Rank #1 (Strong Buy).

Entergy Corporation ( ETR - Analyst Report ) has earnings ESP of +22.12% and carries a Zacks Rank #3 (Hold).

Teco Energy Inc. ( TE - Analyst Report ) has earnings ESP of +20.0% and carries a Zacks Rank #3 (Hold).

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