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AES Gears Up to Report Q1 Earnings: What's in the Cards?

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The AES Corporation (AES - Free Report) is scheduled to release first-quarter 2021 results on May 6, before the opening bell. In the last reported quarter, this utility delivered an earnings surprise of 6.67%.

The company’s earnings surpassed the Zacks Consensus Estimate on two occasions and missed on the other two, with the average surprise being 0.92%.

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

Factors to Consider

During the first quarter, majority of AES Corp.’s service territories witnessed mixed weather pattern. At the onset of the January-March quarter, its service regions experienced colder- than-normal temperature, while above-average temperature was witnessed in the latter part. This is likely to have had a neutral impact on AES Corp.'s first-quarter top line.

The AES Corporation Price and EPS Surprise

The AES Corporation Price and EPS Surprise

The AES Corporation price-eps-surprise | The AES Corporation Quote

 

The company’s joint venture with Siemens, Fluence, had registered a massive 400% annual growth in revenues in 2020. With this joint venture having signed 785 megawatts of new capacity in 2020, we expect a similar revenue contribution from Fluence to have boosted first-quarter revenues as well.

At the end of 2020, the company had project backlog worth 6.9 gigawatts (GW), of which it expects to bring almost 4 GW gigawatts online in 2021. A portion of this target is likely to have come online in the first quarter and that must have boosted the company’s first-quarter revenues.

In line with these expectations, the Zacks Consensus Estimate for first-quarter revenues is pegged at $2.41 billion, which indicates a 3.2% rise from the year-ago quarter’s reported figure.

On the bottom-line front, factors like cost-saving initiatives, interest expense savings, resulting from $7 billion of refinancing across the portfolio and lower adjusted tax rate are expected to have benefited AES Corp.’s quarterly earnings.

Also, higher contributions from the Southland repowering project, which came online in mid-2020, is projected to have boosted AES Corp.’s earnings in the soon-to-be-reported quarter.

Currently, the Zacks Consensus Estimate for first-quarter earnings is pegged at 31 cents, indicating an improvement of 6.9% from the year-ago quarter’s reported figure.

However, lower demand trend due to the COVID-19 impacts and unfavorable hydrological condition in Colombia might have had an adverse impact on the company’s first-quarter results.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AES Corp. 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.

Earnings ESP: The company’s Earnings ESP is -3.83%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AES Corp. carries a Zacks Rank #4 (Sell), currently.

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.

Consolidated Edison (ED - Free Report) has an Earnings ESP of +0.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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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