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Utilities Q1 Earnings Due on Apr 27: DTE, CMS, XEL & More
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The Zacks Utilities sector’s first-quarter earnings are expected to have benefited from a revival of demand in the commercial and industrial groups of customers and an increase in the efficiency of services.
Per the latest Earnings Preview, the Zacks Utilities sector’s first-quarter 2023 earnings are expected to decline 1.7% while revenues are estimated to improve 6.8%. The capital-intensive utility stocks were impacted by the ongoing increase in interest rates, but new rates implemented in their service territories and customer growth boosted profits.
Factors to Consider
Domestic-focused companies operating in the sector are focused on cost management and the implementation of energy-efficiency programs. New rates and customer additions are creating fresh demand for utilities. Investment in strengthening the infrastructure is allowing 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. The utilities are likely to have gained from these favorable conditions in the January-March period.
The passage of the Inflation Reduction Act (IRA) will support and accelerate the utilities' transition toward clean energy sources. IRA has removed the uncertainties relating to federal incentives provided for renewable sources usage. The act entails opportunities for a wide range of low-cost clean energy solutions, in a predictable way for a long time and will create earnings visibility.
However, utilities need massive funds to upgrade, maintain and expand their infrastructure and operations, and are capital-intensive in nature. 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 expected to continue in 2023 and may have pushed up capital servicing expenses and reduced net income in the first quarter.
According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
DTE Energy’s (DTE - Free Report) first-quarter earnings are likely to have been adversely impacted by warmer-than-normal temperatures in its service territories, which lowered demand for electricity needed for heating purposes. However, rate hikes and infrastructure strengthening allowed the company to serve customers efficiently, reducing the power outage duration. ( Read more: What's in the Cards for DTE Energy in Q1 Earnings?)
Our proven model does not conclusively predict an earnings beat for DTE Energy this time around. DTE has an Earnings ESP of 0.00% and a Zacks Rank #3.
CMS Energy’s (CMS - Free Report) first-quarter earnings are likely to have benefited from higher demand in the commercial and industrial customer group. However, warmer-than-normal temperature in the first quarter may have reduced residential demand for electricity. (Read More: What's in the Offing for CMS Energy in Q1 Earnings?)
Our proven model does not conclusively predict an earnings beat for CMS Energy this time around. CMS has an Earnings ESP of 0.00% and a Zacks Rank of 3.
Xcel Energy’s (XEL - Free Report) expanding customer base is likely to have favored its first-quarter earnings. The new natural gas and electric rates implemented in 2022 may have had a positive impact on earnings. The ongoing improvement in productivity and efficiency is expected to have reduced operating and maintenance expenses and boosted earnings. (Read more: Xcel Energy to Report Q1 Earnings: What's in the Cards?)
Our proven model does not conclusively predict an earnings beat for Xcel Energy this time around. XEL has an Earnings ESP of -0.27% and a Zacks Rank #3.
CenterPoint Energy’s (CNP - Free Report) first-quarter earnings are likely to have been adversely impacted by warmer-than-normal temperatures in its service territories, which lowered demand for electricity needed for heating purposes. Nevertheless, rate hikes, along with customer growth observed in the prior quarters, may have driven the company’s revenues. ( Read more: What's in Store for CenterPoint Energy in Q1 Earnings?)
Our proven model does not conclusively predict an earnings beat for CenterPoint Energy this time around. CNP has an Earnings ESP of 0.00% and a Zacks Rank #3.
FirstEnergy Corp. (FE - Free Report) is likely to have gained from transformative equity investments, which should have strengthened its transmission and distribution operations, and aided its first-quarter earnings. The upgraded infrastructure should ensure proper distribution of energy and lower operating expenses.
Our proven model does not conclusively predict an earnings beat for FirstEnergy this time around. FE has an Earnings ESP of 0.00% and a Zacks Rank of 3.
Image: Bigstock
Utilities Q1 Earnings Due on Apr 27: DTE, CMS, XEL & More
The Zacks Utilities sector’s first-quarter earnings are expected to have benefited from a revival of demand in the commercial and industrial groups of customers and an increase in the efficiency of services.
Per the latest Earnings Preview, the Zacks Utilities sector’s first-quarter 2023 earnings are expected to decline 1.7% while revenues are estimated to improve 6.8%. The capital-intensive utility stocks were impacted by the ongoing increase in interest rates, but new rates implemented in their service territories and customer growth boosted profits.
Factors to Consider
Domestic-focused companies operating in the sector are focused on cost management and the implementation of energy-efficiency programs. New rates and customer additions are creating fresh demand for utilities. Investment in strengthening the infrastructure is allowing 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. The utilities are likely to have gained from these favorable conditions in the January-March period.
The passage of the Inflation Reduction Act (IRA) will support and accelerate the utilities' transition toward clean energy sources. IRA has removed the uncertainties relating to federal incentives provided for renewable sources usage. The act entails opportunities for a wide range of low-cost clean energy solutions, in a predictable way for a long time and will create earnings visibility.
However, utilities need massive funds to upgrade, maintain and expand their infrastructure and operations, and are capital-intensive in nature. 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 expected to continue in 2023 and may have pushed up capital servicing expenses and reduced net income in the first quarter.
According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE Energy’s (DTE - Free Report) first-quarter earnings are likely to have been adversely impacted by warmer-than-normal temperatures in its service territories, which lowered demand for electricity needed for heating purposes. However, rate hikes and infrastructure strengthening allowed the company to serve customers efficiently, reducing the power outage duration. ( Read more: What's in the Cards for DTE Energy in Q1 Earnings?)
Our proven model does not conclusively predict an earnings beat for DTE Energy this time around. DTE has an Earnings ESP of 0.00% and a Zacks Rank #3.
DTE Energy Company Price and EPS Surprise
DTE Energy Company price-eps-surprise | DTE Energy Company Quote
CMS Energy’s (CMS - Free Report) first-quarter earnings are likely to have benefited from higher demand in the commercial and industrial customer group. However, warmer-than-normal temperature in the first quarter may have reduced residential demand for electricity. (Read More: What's in the Offing for CMS Energy in Q1 Earnings?)
Our proven model does not conclusively predict an earnings beat for CMS Energy this time around. CMS has an Earnings ESP of 0.00% and a Zacks Rank of 3.
CMS Energy Corporation Price and EPS Surprise
CMS Energy Corporation price-eps-surprise | CMS Energy Corporation Quote
Xcel Energy’s (XEL - Free Report) expanding customer base is likely to have favored its first-quarter earnings. The new natural gas and electric rates implemented in 2022 may have had a positive impact on earnings. The ongoing improvement in productivity and efficiency is expected to have reduced operating and maintenance expenses and boosted earnings. (Read more: Xcel Energy to Report Q1 Earnings: What's in the Cards?)
Our proven model does not conclusively predict an earnings beat for Xcel Energy this time around. XEL has an Earnings ESP of -0.27% and a Zacks Rank #3.
Xcel Energy Inc. Price and EPS Surprise
Xcel Energy Inc. price-eps-surprise | Xcel Energy Inc. Quote
CenterPoint Energy’s (CNP - Free Report) first-quarter earnings are likely to have been adversely impacted by warmer-than-normal temperatures in its service territories, which lowered demand for electricity needed for heating purposes. Nevertheless, rate hikes, along with customer growth observed in the prior quarters, may have driven the company’s revenues. ( Read more: What's in Store for CenterPoint Energy in Q1 Earnings?)
Our proven model does not conclusively predict an earnings beat for CenterPoint Energy this time around. CNP has an Earnings ESP of 0.00% and a Zacks Rank #3.
CenterPoint Energy, Inc. Price and EPS Surprise
CenterPoint Energy, Inc. price-eps-surprise | CenterPoint Energy, Inc. Quote
FirstEnergy Corp. (FE - Free Report) is likely to have gained from transformative equity investments, which should have strengthened its transmission and distribution operations, and aided its first-quarter earnings. The upgraded infrastructure should ensure proper distribution of energy and lower operating expenses.
Our proven model does not conclusively predict an earnings beat for FirstEnergy this time around. FE has an Earnings ESP of 0.00% and a Zacks Rank of 3.
FirstEnergy Corporation Price and EPS Surprise
FirstEnergy Corporation price-eps-surprise | FirstEnergy Corporation Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.