First-quarter earnings for the S&P 500 members of the Zacks Utilities sector have been satisfactory so far. The sector is off to a solid start in the first-quarter earnings season, with
NextEra Energy ( NEE Quick Quote NEE - Free Report) and DTE Energy ( DTE Quick Quote DTE - Free Report) beating estimates by 11.7% and 13%, respectively. For the quarter, the sector is expected to witness growth of 4.1% and 4.3% in earnings and revenues, respectively, per our latest Earnings Trends report. Utilities are benefiting from new rates, cost control, ongoing investments to strengthen the electric infrastructure and their transition toward cost-effective alternate sources of fuel to produce electricity. Factors to Note
The pandemic outbreak last year created challenges for Utilities as lockdown on all economic activities lowered demand from the commercial and industrial (C&I) 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.
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. The Utilities are likely to have benefited from an increase in the demand for utility services in the first quarter driven by a boost in C&I activities. The near-zero interest rates have been assisting the capital-intensive companies 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. Let’s focus on a few utility companies that are scheduled to release first-quarter 2021 earnings on Apr 29. Xcel Energy ( XEL Quick Quote XEL - Free Report) is slated to release quarterly results before the market opens. The company’s first-quarter results are expected to reflect elevated residential and C&I group’s sales as well as new rates, both of which are likely to have acted as tailwinds. (Read more: What's in the Cards for Xcel Energy in Q1 Earnings?) 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. You can see . the complete list of today’s Zacks #1 Rank stocks here Our proven model does conclusively predict an earnings beat for Xcel Energy this time around. It has an Earnings ESP of +0.41% 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. PG&E Corporation ( PCG Quick Quote PCG - Free Report) is scheduled to report quarterly results before market open. First-quarter earnings are likely to have been impacted by wildfire-related costs and storm-related damages. (Read more: PG&E to Report Q1 Earnings: What's in the Offing?) The company currently has an Earnings ESP of 0.00% and a Zacks Rank of 3. CMS Energy ( CMS Quick Quote CMS - Free Report) is set to release quarterly results before market open. Improving economic activities are likely to have boosted demand in the first quarter. (Read more: CMS Energy to Report Q1 Earnings: What's in the Cards?) The company currently has an Earnings ESP of 0.00% and a Zacks Rank of 3. CMS Energy Corporation Price and EPS Surprise The Southern Company ( SO Quick Quote SO - Free Report) is set to release results before market open. First-quarter earnings are likely to have benefited from its expanding customer base. However, rising operating costs may have been a concern. (Read more: Southern Company to Report Q1 Results: What Awaits?) The company currently has an Earnings ESP of 0.00% and a Zacks Rank of 3. Zacks Names “Single Best Pick to Double”
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