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What Awaits Public Service Enterprise (PEG) in Q1 Earnings?

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Public Service Enterprise Group Inc. (PEG - Free Report) , better known as PSEG, is scheduled to release first-quarter 2021 results on May 5, before the opening bell.

The company delivered a negative earnings surprise of 1.52% in the last reported quarter. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, came in line with the same once and missed once, with the average surprise being 8.36%.

Let’s see how things have shaped up prior to the announcement.

Factors to Consider

During the January-March 2021 quarter, majority of Public Service Enterprise’s service territory areas experienced mixed weather pattern. While at the onset of the first quarter, drier-than-normal temperature prevailed in its service regions, in February significant snowfall was observed. Again, in March, the temperature remained above-average. So the overall impact of weather is expected to have contributed favorably to the company’s top-line performance in the soon-to-be-reported quarter.

However, during its fourth-quarter earnings call, PSEG announced that 2021 average hedge prices will no longer include cost-based transmission charges for New Jersey's basic generation service contracts due to a change in how they are billed and collected. This change is projected to reduce the company’s 2021 revenues by approximately $3 per megawatt hour starting on Feb 1. This might had an unfavorable impact on the company’s first-quarter revenues.

The Zacks Consensus Estimate for Public Service Enterprise’s first-quarter revenues is currently pegged at $3.06 billion, indicating an improvement of 10% from the year-ago quarter’s reported figure.

A handful of storms, accompanied with moderate snow fall, affected the company’s service territories during the first quarter, while in March an unusually large wildfire affected parts of New Jersey. These might have caused power outages for the company’s customers, thereby pushing  up restoration costs for the company, which in turn might have weighed on its quarterly earnings.

On a brighter note, rate base growth in the recent past is expected to have boosted earnings for Public Service Enterprise in the first quarter. Moreover, improved margins driven by higher residential uses must have also contributed to the company’s bottom-line growth in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.13 per share, which suggests 9.7% improvement from the year-ago quarter reported figure.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Public Service Enterprise this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.  But that is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Public Service Enterprise carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some players from the Utilities sector with the right combination of elements to post an earnings beat in the to-be-reported quarter.

CenterPoint Energy (CNP - Free Report) has an Earnings ESP of +4.52% and a Zacks Rank #3.

UGI Corp (UGI - Free Report) has an Earnings ESP of +1.74% and a Zacks Rank #3.

Duke Energy (DUK - Free Report) has an Earnings ESP of +0.16% and a Zacks Rank #3.

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