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What's in Store for American Electric's (AEP) Q1 Earnings?

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American Electric Power Company, Inc. (AEP - Free Report) is set to release first-quarter 2021 results on Apr 22, before market open. In the last reported quarter, the company delivered an earnings surprise of 10.1%.

In the trailing four quarters, American Electric delivered an average earnings surprise of 1.6%.

Let's take a closer look at the factors that are likely to influence the company’s upcoming quarterly results.

Factors at Play

During the January-March 2021 quarter, the majority of the company's service territories witnessed colder-than-normal temperature. This must have boosted electricity demand for heating purpose among American Electric’s customers and, in turn, promoted top-line growth in the soon-to-be-reported quarter.

Also, the impact of favorable rate changes across multiple jurisdictions and higher transmission revenues are expected to have contributed favorably to its quarterly revenues.

The Zacks Consensus Estimate for American Electric’s first-quarter revenues is pegged at $4.13 billion, indicating a rise of 10.3% from the year-ago reported figure.

A handful of states within the company’s service territories experienced strong storm activities, with some of them witnessing hails, while some tornedos.

Such weather conditions damaged electric poles and infrastructure, apart from causing widespread outages. This might have increased American Electric’s quarterly expenses, thereby hurting the bottom line.

Meanwhile, the company has been exerting efforts to achieve notable cost-reduction targets, an initiative that is expected to have offset the negative impact of the aforementioned storm activities on overall expense to some extent.

Further, since fourth-quarter 2020, it has been witnessing improvement in commercial and industrial loads, as the economy is gradually recovering. Therefore, solid margin from residential sales, with the shift of many people to the work-from-home culture, and commercial and industrial sales must have boosted operating margin in the first quarter. This in turn must have bolstered its overall earnings performance.

The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $1.24 per share, suggesting a 21.6% improvement from the year-ago reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for American Electric this time around. 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. This is not the case here.

Earnings ESP: American Electric has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a handful of stocks from the Utilities sector that are yet to release Q1 results and possess the right combination to deliver an earnings beat.

CenterPoint Energy (CNP - Free Report) has an Earnings ESP of +12.99% and holds a Zacks Rank #2.

Ameren Corp. (AEE - Free Report) has an Earnings ESP of +1.16% and carries a Zacks Rank #3.

CMS Energy (CMS - Free Report) has an Earnings ESP of +0.25% and carries a Zacks Rank #2.

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