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Edison International to Miss Again?

by Zacks Equity Research

February 25, 2013 | Comments : 0 Recommended this article: (0)

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Edison International ( EIX - Analyst Report ) is slated to release its fourth quarter 2012 financial results after the market bell on Feb 26, 2013. In the last reported quarter, the electric generation and distribution company posted a negative surprise of 26.36%. Let’s see how things are shaping up at Edison prior to this announcement.

Factors to Consider This Quarter

We believe the company’s weak merchant generation fleet, pending general rate case decision and uncertainty regarding the approval of restarting the San Ofre nuclear unit will act as challenges for the stock.

However, benefits accrued from sale of its remaining lease interest in the Beaver Valley nuclear station and lower income tax could somewhat provide a respite from the aforementioned negatives.

Earnings Whispers

Our proven model does not conclusively show that Edison International 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.

Negative Zacks ESP: This is because the Most Accurate estimate stands at $1.05 per share while the Zacks Consensus Estimate is higher at $1.09, resulting in -3.67% ESP.

Zacks Rank #3 (Hold): Edison’s Zacks Rank #3 when combined with negative ESP makes surprise prediction difficult. We caution investors against the stock going into the earnings announcement, as a negative Zacks ESP 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:

Berry Petroleum Company ( BRY - Snapshot Report ) has earnings ESP of +4.05% and carries a Zacks Rank #3 (Hold).

Ormat Technologies Inc. ( ORA - Snapshot Report ) has earnings ESP of +50.00% and carries a Zacks Rank #2 (Buy).

Gran Tierra Energy Inc. ( GTE - Snapshot Report ) has earnings ESP of +7.69% and carries a Zacks Rank #3 (Hold).

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