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Utility Stock Q2 Earnings Due on Jul 29: XEL, SO, ES & More

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Second-quarter earnings for S&P 500 members of the Zacks Utilities sector have been satisfactory so far. The sector is off to a solid start to the second-quarter earnings season, with NextEra Energy (NEE - Free Report) and American Electric Power Company (AEP - Free Report) beating estimates by 5.9% and 3.5%, respectively. For the quarter, the sector is expected to witness growth of 5.7% and 6.7% in earnings and revenues, respectively, per our latest Earnings Trends report.

Utilities have been benefiting from new electric rates, customer additions, cost management, implementation of energy efficiency programs, ongoing investments to improve resilience of the electric infrastructure against extreme weather conditions and their transition toward cost-effective alternate sources of fuel to produce electricity.

Factors to Note

Utilities across the United States have been making the most of economic improvement, as the nation continues to recover from the pandemic impact. Rollout of vaccines and increasing medical knowledge to deal with COVID-19 are gradually bringing life back to normal, despite threat from the new variant of the virus. Improving economic activities increased demand from the commercial and industrial (C&I) group in the second quarter. Stable demand from the residential space has been supporting the utilities.

Utilities continued with their investments to strengthen transmission and distribution lines, expanded infrastructure, ensured proper maintenance of the existing infrastructure that aids in providing 24x7 services to customers as well as boosted earnings. The continuation of near-zero interest rates has been assisting capital-intensive companies to get funds at low costs to carry on with infrastructure strengthening work.

Per the U.S. Energy Information Administration (“EIA”), electricity consumption in the United States will increase 2.8% in 2021, after falling 3.9% in 2020, primarily due to gradual improvement in economic conditions. The utilities are likely to have benefited from an increase in the demand for utility services in the second quarter driven by a boost in C&I activities. Per EIA, in 2021, electricity demand from industrial and commercial customers is likely to improve 5.1% and 2.1%, respectively, from 2020 levels.

Let’s focus on a few utility companies that are scheduled to release second-quarter 2021 earnings on Jul 29.

Xcel Energy (XEL - Free Report) is slated to release quarterly results before the market opens. The company’s second-quarter results are expected to benefit from higher demand from increasing electric and natural gas customer volumes. New rates and cost management are likely to have acted as tailwinds. (Read more: What's in the Cards for Xcel Energy in Q2 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 predicts an earnings beat for Xcel Energy this time around. It has an Earnings ESP of +0.45% 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.

Xcel Energy Inc. Price and EPS Surprise

Xcel Energy Inc. Price and EPS Surprise

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

The Southern Company (SO - Free Report) is set to release quarterly results before market open. Second-quarter earnings are likely to have benefited from its expanding customer base. Yet, rising operating costs may have been a concern. (Read more: Southern Company Queued for Q2 Earnings: Things to Note)

The company currently has an Earnings ESP of 0.00% and a Zacks Rank of 3.

Southern Company The Price and EPS Surprise

Southern Company The Price and EPS Surprise

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

Edison International (EIX - Free Report) is scheduled to report quarterly results after market close. Second-quarter earnings are likely to have benefited from above-average temperatures, which must have spurred electricity demand among the utility’s customers in the region. (Read more: What's in Store for Edison International in Q2 Earnings?)

The company currently has an Earnings ESP of -1.66% and a Zacks Rank of 3.

Edison International Price and EPS Surprise

Edison International Price and EPS Surprise

Edison International price-eps-surprise | Edison International Quote

CMS Energy (CMS - Free Report) is set to release quarterly results before market open. Improving economic activities in its service territories are likely to have boosted demand in the second quarter from all customer groups. (Read more: CMS Energy to Report Q2 Earnings: What's in the Cards?)

The company currently has an Earnings ESP of + 4.17% and a Zacks Rank of 4 (Sell).

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation price-eps-surprise | CMS Energy Corporation Quote

Eversource Energy (ES - Free Report) is slated to release quarterly results before the market opens. The company’s second-quarter results are expected to benefit from contribution from the acquired Columbia Gas of Massachusetts assets. Its second-quarter earnings are likely to have benefited from electric transmission system investment. (Read more: Eversource Energy to Post Q2 Earnings: What's in Store?)

The company currently has an Earnings ESP of -0.06% and a Zacks Rank of 4.

Eversource Energy Price and EPS Surprise

Eversource Energy Price and EPS Surprise

Eversource Energy price-eps-surprise | Eversource Energy Quote

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