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Utility Stocks' Q4 Earnings Due on Feb 18: SO, ED, & More

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A handful of stocks from the Utilities sector have reported Q4 results so far, with most of them recording year-over-year earnings growth. Unfortunately, this time, the regulated Utilities sector is one among seven of the total 16 Zacks sectors projected to report year-over-year earnings decline.

Notably, total Q4 earnings of Utility stocks are expected to drop 2.8% year over year on 0.1% lower revenues. For more details on quarterly releases, you can go through our latest Earnings Preview.

Factors to Consider

Courtesy of the coronavirus outbreak, irregular economic activities have been hampering electricity demand from commercial and industrial space (C&I), thereby hurting the top line prospects of utility providers. However, since the latter part of the third quarter, there has been a gradual recovery in the overall situation, which must have boosted demand from C&I space. Moreover, increased demand from the residential group due to stay-at-home directives has been contributing to residential electricity sales growth.  Cumulatively, these might have resulted in the sector not loosing significantly in terms of revenues.

The pandemic did not deter Utilities and it continued with its capital expenditure projects to fortify infrastructure. Also, the prevailing near zero interest rates offered great help as it kept capital servicing cost low and boosted margins of the sector.

Use of advanced technology and ongoing research & development work lowered cost of producing from clean energy sources. However, during the fourth quarter, solid storm activities including Hurricanes Eta, Delta and Zeta ravaged the coastal parts of the United States, followed by flash floods. No doubt such tropical storms damaged utility infrastructure, thereby pushing up quarterly costs for utility providers in the storm-affected regions. This in turn might have dragged down the sector’s overall earnings that should get reflected in the fourth-quarter results.

Utility Earnings in Focus

Let’s focus on a few utility companies that are scheduled to release fourth-quarter 2020 earnings on Feb 18.

The Southern Company (SO - Free Report) reported an earnings surprise of 7.19% in the last four quarters, on average. Leveraging the demographics of its operating territories, the company has been successfully expanding its regulated business customer base. We expect its fourth-quarter results to reflect a similar trend of notable customer growth.

With approximately a third of the Southern Company’s total retail sales coming from industrial customers, a sluggish consumption pattern owing to the pandemic might have affected its quarterly performance (Read more: Why Southern Company's Q4 Earnings are Likely to Beat).

Per the Zacks quantitative model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Our proven model predicts an earnings beat for Southern Company this time around. It has an Earnings ESP of +2.03% and a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Southern Company The Price and EPS Surprise

Southern Company The Price and EPS Surprise

Southern Company The price-eps-surprise | Southern Company The Quote

Consolidated Edison’s (ED - Free Report) four-quarter average earnings surprise is 2.92%. For most part of the fourth quarter, Consolidated Edison’s service territories witnessed notable snowfall along with wind gusts. This must have positively contributed to its top-line performance.

However, the company has been incurring incremental expenses related to information technology for facilitating teleworking, benefits for employees and dependents affected by COVID-19 and other additional costs to support the safety and well-being of workers during the crisis. This might have hurt its earnings in the yet-to-be-reported quarter (Read more: What's in Store for Consolidated Edison in Q4 Earnings?).

The company has an Earnings ESP of -4.00% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Consolidated Edison Inc Price and EPS Surprise

Consolidated Edison Inc Price and EPS Surprise

Consolidated Edison Inc price-eps-surprise | Consolidated Edison Inc Quote

PPL Corporation’s (PPL - Free Report) four-quarter average negative earnings surprise is 1.53%. With the restoration of economic activities, demand for utility service is rising and is gradually returning to the pre-pandemic levels. PPL Corp. with its wide customer base is expected to have benefited from this in the fourth quarter. However, lower share count is expected to have dented PPL Corp.’s earnings.

The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3 (Read more: PPL Gears Up for Q4 Earnings: What's in Store for the Stock?).

PPL Corporation Price and EPS Surprise

PPL Corporation Price and EPS Surprise

PPL Corporation price-eps-surprise | PPL Corporation Quote

FirstEnergy Corporation’s (FE - Free Report) four-quarter average earnings surprise is 6.59%. With economic operations gradually reopening, the company’s fourth-quarter results are likely to be driven by improvement in demand from Commercial and Industrial group. However, many regions during the quarter witnessed power cuts and disruptions owing to winter storms, which might have negatively impacted its earnings.

The company has an Earnings ESP of -1.01% and carries a Zacks Rank #3 (Read more: What's in the Offing for FirstEnergy's Q4 Earnings?).

FirstEnergy Corporation Price and EPS Surprise

FirstEnergy Corporation Price and EPS Surprise

FirstEnergy Corporation price-eps-surprise | FirstEnergy Corporation Quote

Alliant Energy Corporation’s (LNT - Free Report) four-quarter average earnings surprise is 18.27%. Steady demand from the residential space is likely to have aided the company’s fourth-quarter performance. It continued to add more clean energy sources to its electricity generation portfolio and reached 1,000-megawatt (MW) worth generation capacity from its wind assets. The soon-to-be-reported quarterly results should duly reflect these.

The company has an Earnings ESP of 0.00% and carries a Zacks Rank #4 (Read more: Alliant Energy to Report Q4 Earnings: What's in Store?).

Alliant Energy Corporation Price and EPS Surprise

Alliant Energy Corporation Price and EPS Surprise

Alliant Energy Corporation price-eps-surprise | Alliant Energy Corporation Quote

 

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