Duke Energy Corp. (DUK - Free Report) , an electric and natural gas utility based in Charlotte, NC, is set to report second-quarter 2016 results before the opening bell on Aug 4. Last quarter, Duke Energy recorded a 0.00% earnings surprise. Let’s see how things are shaping up for this quarter.
Why a Likely Positive Surprise?
Our proven model shows that Duke Energy is likely to beat earnings this season 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 Duke Energy has the right mix.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.00%. This is because the Most Accurate estimate stands at $1.02, while the Zacks Consensus Estimate is pegged slightly lower at $1.00. This is a meaningful indicator of a likely positive earnings surprise.
Zacks Rank: Duke Energy’s Zacks Rank #2, when combined with a positive ESP, makes us reasonably confident of an earnings beat this quarter.
Conversely, Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving the Better-than-Expected Earnings?
Duke Energy’s stable regulated operations, systematic capital investment program and renewable asset expansion are tailwinds. The company has undertaken several projects and plans to invest about $25 billion to $30 billion over the 2016–2020 time frame. It must be noted here that the company anticipates capital investment of $9.225 billion in 2016, along with additional investments, to support its targeted earnings growth rate of 4–6% through 2020.
The company expects 2016 earnings to be in the range of $4.50–$4.70 per share. Duke Energy is in the midst of a portfolio transition with the sale of its international business and the acquisition of Piedmont, on both of which the company expects to make substantial progress in 2016.
Moreover, above-average summer temperatures at its service territories might positively impact its second-quarter sales.
For the second quarter, the Zacks Consensus Estimate for earnings is $1.00 a share, reflecting an increase of 5.71% year over year, while consensus revenues are pegged at $5.75 billion, implying 2.89% year-over-year growth.
Other Stocks to Consider
Here are a few other players in the utility space, which also have the right combination of elements to post an earnings beat this quarter:
AES Corp. (AES - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3. It is slated to report earnings on Aug 5.
Entergy Corporation (ETR - Free Report) has an Earnings ESP of +6.73% and a Zacks Rank #3. It is expected to report earnings on Aug 2.
Avista Corp. (AVA - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2. It is expected to report earnings on Aug 3.
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Duke Energy Corp. (DUK - Free Report) , an electric and natural gas utility based in Charlotte, NC, is set to report second-quarter 2016 results before the opening bell on Aug 4. Last quarter, Duke Energy recorded a 0.00% earnings surprise. Let’s see how things are shaping up for this quarter.
Why a Likely Positive Surprise?
Our proven model shows that Duke Energy is likely to beat earnings this season 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 Duke Energy has the right mix.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.00%. This is because the Most Accurate estimate stands at $1.02, while the Zacks Consensus Estimate is pegged slightly lower at $1.00. This is a meaningful indicator of a likely positive earnings surprise.
Zacks Rank: Duke Energy’s Zacks Rank #2, when combined with a positive ESP, makes us reasonably confident of an earnings beat this quarter.
Conversely, Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving the Better-than-Expected Earnings?
Duke Energy’s stable regulated operations, systematic capital investment program and renewable asset expansion are tailwinds. The company has undertaken several projects and plans to invest about $25 billion to $30 billion over the 2016–2020 time frame. It must be noted here that the company anticipates capital investment of $9.225 billion in 2016, along with additional investments, to support its targeted earnings growth rate of 4–6% through 2020.
The company expects 2016 earnings to be in the range of $4.50–$4.70 per share. Duke Energy is in the midst of a portfolio transition with the sale of its international business and the acquisition of Piedmont, on both of which the company expects to make substantial progress in 2016.
Moreover, above-average summer temperatures at its service territories might positively impact its second-quarter sales.
For the second quarter, the Zacks Consensus Estimate for earnings is $1.00 a share, reflecting an increase of 5.71% year over year, while consensus revenues are pegged at $5.75 billion, implying 2.89% year-over-year growth.
Other Stocks to Consider
Here are a few other players in the utility space, which also have the right combination of elements to post an earnings beat this quarter:
AES Corp. (AES - Free Report) has an Earnings ESP of +11.11% and a Zacks Rank #3. It is slated to report earnings on Aug 5.
Entergy Corporation (ETR - Free Report) has an Earnings ESP of +6.73% and a Zacks Rank #3. It is expected to report earnings on Aug 2.
Avista Corp. (AVA - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2. It is expected to report earnings on Aug 3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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