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4 Utility Stocks Set to Beat Estimates This Earnings Season

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The companies belonging to the Zacks Utilities sector ensure continuous supply of electricity, potable water and natural gas, and provide wastewater services to millions of customers across the United States. The sector is off to a solid start in the first-quarter earnings season, with NextEra Energy (NEE - Free Report) beating estimates by 11.7%.

Normally, demand for the services provided by Utility companies does not fluctuate much. However, the pandemic outbreak last year changed this scenario, with significant decline in demand from the industrial and commercial space. However, things have started to change for the better with the rollout of vaccines across the United States and conditions gradually becoming normal, even though the threat from the COVID-19 pandemic is yet to be over. Colder temperatures in first-quarter 2021 than the previous year boosted demand and benefited the utilities.

Utilities are likely to have benefited from the improvement in demand in the first quarter. Near-zero interest rates have been assisting them to get funds at low costs to carry on with infrastructure strengthening work and add more technically-advanced assets to their portfolio for serving customers efficiently. Per the U.S. Energy Information Administration (“EIA”), electricity consumption in the United States will increase 2.1% in 2021 after falling 3.8% in 2020, primarily due to the gradual improvement in economic conditions.  

Utilities across the United States have resorted to cost management that helped them to lower operating expenses. The Utilities have also educated consumers about effective utilization of energy, installed smart meters and taken steps to strengthen the grids for increasing overall resilience of the system. During the first quarter, the Utilities placed in service several cost-effective renewable utility scale power projects across the United States, which helped them cut emissions and lower operating expenses.

For the quarter as a whole, the sector is expected to witness growth of 4.1% and 4.2% in earnings and revenues, respectively, per the latest Earnings Trends report.

Picking Winners From the Utility Space

Choosing the right stock for one’s portfolio from too many participants is certainly a tough job. An easy way to streamline the list is by selecting stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Per our proprietary methodology, Earnings ESP is a determining factor for zeroing in on stocks with maximum chances of beating on earnings. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Our research shows that stocks with the right combination of the two key ingredients have 70% higher chances of delivering an earnings surprise.

For investors looking to find winners, we have highlighted four Utility stocks that are poised to beat first-quarter earnings estimates.

Our Utility Bets for Q1

Detroit, MI-based DTE Energy Company (DTE - Free Report) — along with its subsidiaries — engages  in regulated and unregulated energy businesses as well as provides electricity and natural gas to nearly 3.5 million customers. The company has an Earnings ESP of +3.03% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is scheduled to report fiscal first-quarter 2021 results on Apr 27.

DTE Energy Company Price and EPS Surprise

DTE Energy Company Price and EPS Surprise

DTE Energy Company price-eps-surprise | DTE Energy Company Quote


Atlanta, GA-based The Southern Company (SO - Free Report) serves nearly 9 million electric and natural gas customers in its service territories. The company has an Earnings ESP of +2.10% and a Zacks Rank #3, currently.

The company is scheduled to report first-quarter 2021 results on Apr 29.

Southern Company The Price and EPS Surprise

Southern Company The Price and EPS Surprise

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

Camden, NJ-based American Water Works Company (AWK - Free Report) provides essential water and wastewater services to more than 15 million customers in 47 states and the District of Columbia. The company has an Earnings ESP of +0.91% and a Zacks Rank of 3, at present.

The company is scheduled to report first-quarter 2021 results on May 3.

Richmond, VA-based Dominion Energy (D - Free Report) serves nearly 7.5 million electric or natural gas customers across 18 states. The company currently has an Earnings ESP of +3.78% and a Zacks Rank of 3.

The company is scheduled to report first-quarter 2021 results on May 4.

Dominion Energy Inc. Price and EPS Surprise

Dominion Energy Inc. Price and EPS Surprise

Dominion Energy Inc. price-eps-surprise | Dominion Energy Inc. Quote

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