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Utilities to Watch for Q4 Earnings on Feb 16: ETR, ED & More
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Utilities is one of the nine sectors, out of the total 16 Zacks sectors, which are expected to report year-over-year earnings growth for the fourth quarter of 2022.
So far, a handful of the S&P 500 members from the Zacks Utilities sector have released their Q4 earnings. Another cohort of major utility stocks, including Entergy Corp. (ETR - Free Report) , Consolidated Edison (ED - Free Report) , Ameren Corp. (AEE - Free Report) , Allete (ALE - Free Report) and IDACORP (IDA - Free Report) , is set to announce their earnings on Feb 16.
Factors to Consider
Domestic-focused utility companies are focused on cost management and implementation of energy-efficiency programs. Favorable rate revision and customer additions have been creating fresh demand as well as assisting the utilities. Investment in strengthening the infrastructure has been allowing the utilities to provide services even during extreme conditions, leading to stable earnings. Domestic-focused operations also insulate utilities from the adverse impact of currency fluctuation. These factors are projected to contribute to this sector’s Q4 results.
A clear transition is evident in the Utilities space, with the players gradually moving toward clean sources of fuel to produce electricity and lower emission. The stringent regulations pertaining to emissions and the high cost of conventional fuel and government incentives on the usage of clean fuel are also urging the utilities to focus more on clean energy sources. Many utilities have already pledged to provide 100% electricity from clean sources in the next few decades.
The passage of Inflation Reduction Act (IRA) will support and accelerate utilities’ transition toward clean energy sources. IRA has removed the uncertainties relating to federal incentives provided for renewable sources usage. The Act entails an opportunity for a wide range of low-cost clean energy solutions in a much more predictable way for a long time and will create earnings visibility.
Utilities need massive funds to upgrade, maintain and expand their infrastructure and operations and are capital-intensive. The performance of the utilities is likely to have been adversely impacted by the increase in interest rates from near-zero levels. The increase in borrowing costs in 2022 is likely to have pushed up capital servicing expenses and adversely impacted Q4 earnings.
Q4 Expectations
Total Q4 earnings of Utility stocks are expected to improve 2.8% year over year, while revenues are likely to slip 0.7%.
For more details on quarterly releases, you can go through our latest Earnings Preview.
Utilities' Earnings in Focus
Let's take a look at the following utility companies that are scheduled to report fourth-quarter 2022 earnings on Feb 16 and find out how things have shaped up prior to the announcements.
Entergy delivered a four-quarter average earnings surprise of 8.99%. Its service territories witnessed a below-normal cold weather pattern in the fourth quarter. This is likely to have boosted its Q4 revenue growth.
A handful of factors like increased power delivery expenses, including higher vegetation costs, partly driven by inflation as well as higher costs for transmission maintenance and nuclear operations are expected to have hurt the company’s Q4 bottom-line performance (read more: Entergy to Report Q4 Earnings: What's in the Cards?).
Entergy has an Earnings ESP of +3.30% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Consolidated Edison delivered a four-quarter average earnings surprise of 9.06%. During most of fourth-quarter 2022, its service territories witnessed more or less moderate weather pattern, which, in turn, is expected to have contributed to the company’s fourth-quarter revenues.
A historic snowstorm affected Consolidated Edison’s service areas in November 2022, the impact of which might hurt its results.
Ameren delivered a four-quarter average negative earnings surprise of 0.76%. Strong rate-based growth plans being supported by strategic infrastructure investments across all its business segments are expected to have added impetus to AEE’s overall fourth-quarter revenues.
Increased operations and maintenance expenses, mainly due to unfavorable market returns, might have dented Ameren’s Q4 bottom line.
Allete delivered a four-quarter average negative earnings surprise of 1.49%. The Zacks Consensus Estimate for the company’s fourth-quarter earnings, pegged at $1.26 implies a 6.8% improvement from the year-ago quarter’s reported figure.
The company holds a long-term earnings growth rate of 9.6%. Allete has an Earnings ESP of 0.00% and Zacks Rank #2.
IDACORP delivered a four-quarter average negative earnings surprise of 1.74%. The Zacks Consensus Estimate for the company’s fourth-quarter earnings, pegged at 82 cents, implies a 26.2% improvement from the year-ago quarter’s reported figure.
The company has a long-term earnings growth rate of 3.4%. IDA has an Earnings ESP of -10.84% and Zacks Rank #3.
Image: Bigstock
Utilities to Watch for Q4 Earnings on Feb 16: ETR, ED & More
Utilities is one of the nine sectors, out of the total 16 Zacks sectors, which are expected to report year-over-year earnings growth for the fourth quarter of 2022.
So far, a handful of the S&P 500 members from the Zacks Utilities sector have released their Q4 earnings. Another cohort of major utility stocks, including Entergy Corp. (ETR - Free Report) , Consolidated Edison (ED - Free Report) , Ameren Corp. (AEE - Free Report) , Allete (ALE - Free Report) and IDACORP (IDA - Free Report) , is set to announce their earnings on Feb 16.
Factors to Consider
Domestic-focused utility companies are focused on cost management and implementation of energy-efficiency programs. Favorable rate revision and customer additions have been creating fresh demand as well as assisting the utilities. Investment in strengthening the infrastructure has been allowing the utilities to provide services even during extreme conditions, leading to stable earnings. Domestic-focused operations also insulate utilities from the adverse impact of currency fluctuation. These factors are projected to contribute to this sector’s Q4 results.
A clear transition is evident in the Utilities space, with the players gradually moving toward clean sources of fuel to produce electricity and lower emission. The stringent regulations pertaining to emissions and the high cost of conventional fuel and government incentives on the usage of clean fuel are also urging the utilities to focus more on clean energy sources. Many utilities have already pledged to provide 100% electricity from clean sources in the next few decades.
The passage of Inflation Reduction Act (IRA) will support and accelerate utilities’ transition toward clean energy sources. IRA has removed the uncertainties relating to federal incentives provided for renewable sources usage. The Act entails an opportunity for a wide range of low-cost clean energy solutions in a much more predictable way for a long time and will create earnings visibility.
Utilities need massive funds to upgrade, maintain and expand their infrastructure and operations and are capital-intensive. The performance of the utilities is likely to have been adversely impacted by the increase in interest rates from near-zero levels. The increase in borrowing costs in 2022 is likely to have pushed up capital servicing expenses and adversely impacted Q4 earnings.
Q4 Expectations
Total Q4 earnings of Utility stocks are expected to improve 2.8% year over year, while revenues are likely to slip 0.7%.
For more details on quarterly releases, you can go through our latest Earnings Preview.
Utilities' Earnings in Focus
Let's take a look at the following utility companies that are scheduled to report fourth-quarter 2022 earnings on Feb 16 and find out how things have shaped up prior to the announcements.
Entergy delivered a four-quarter average earnings surprise of 8.99%. Its service territories witnessed a below-normal cold weather pattern in the fourth quarter. This is likely to have boosted its Q4 revenue growth.
A handful of factors like increased power delivery expenses, including higher vegetation costs, partly driven by inflation as well as higher costs for transmission maintenance and nuclear operations are expected to have hurt the company’s Q4 bottom-line performance (read more: Entergy to Report Q4 Earnings: What's in the Cards?).
According to the Zacks 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.
Entergy has an Earnings ESP of +3.30% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Entergy Corporation Price and EPS Surprise
Entergy Corporation price-eps-surprise | Entergy Corporation Quote
Consolidated Edison delivered a four-quarter average earnings surprise of 9.06%. During most of fourth-quarter 2022, its service territories witnessed more or less moderate weather pattern, which, in turn, is expected to have contributed to the company’s fourth-quarter revenues.
A historic snowstorm affected Consolidated Edison’s service areas in November 2022, the impact of which might hurt its results.
Consolidated Edison currently has an Earnings ESP of -0.26% and Zacks Rank #3 (read more: What's in Store for Consolidated Edison in Q4 Earnings? ).
Consolidated Edison Inc Price and EPS Surprise
Consolidated Edison Inc price-eps-surprise | Consolidated Edison Inc Quote
Ameren delivered a four-quarter average negative earnings surprise of 0.76%. Strong rate-based growth plans being supported by strategic infrastructure investments across all its business segments are expected to have added impetus to AEE’s overall fourth-quarter revenues.
Increased operations and maintenance expenses, mainly due to unfavorable market returns, might have dented Ameren’s Q4 bottom line.
Ameren currently has an Earnings ESP of -0.12% and Zacks Rank #3 (read more: Ameren to Report Q4 Earnings: What's in the Cards?).
Ameren Corporation Price and EPS Surprise
Ameren Corporation price-eps-surprise | Ameren Corporation Quote
Allete delivered a four-quarter average negative earnings surprise of 1.49%. The Zacks Consensus Estimate for the company’s fourth-quarter earnings, pegged at $1.26 implies a 6.8% improvement from the year-ago quarter’s reported figure.
The company holds a long-term earnings growth rate of 9.6%. Allete has an Earnings ESP of 0.00% and Zacks Rank #2.
Allete, Inc. Price and EPS Surprise
Allete, Inc. price-eps-surprise | Allete, Inc. Quote
IDACORP delivered a four-quarter average negative earnings surprise of 1.74%. The Zacks Consensus Estimate for the company’s fourth-quarter earnings, pegged at 82 cents, implies a 26.2% improvement from the year-ago quarter’s reported figure.
The company has a long-term earnings growth rate of 3.4%. IDA has an Earnings ESP of -10.84% and Zacks Rank #3.
IDACORP, Inc. Price and EPS Surprise
IDACORP, Inc. price-eps-surprise | IDACORP, Inc. Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.