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What's in Store for American Electric (AEP) in Q3 Earnings?

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American Electric Power Company, Inc (AEP - Free Report) is slated to release its third-quarter 2023 results on Nov 2 before the opening bell.

In the last reported quarter, the company delivered a negative earnings surprise of 0.88%. American Electric has a trailing four-quarter earnings surprise of 1.43%, on average.

Factors to Note

Most of AEP’s service territories observed warm weather conditions in the third quarter. This may have increased the electricity demand for cooling purposes from the company’s customers during summer. This is likely to have contributed to American Electric's top line in the third quarter.

Favorable rate revisions leading to overall utility and transmission revenue growth may have aided its top line in the third quarter. Also, AEP’s residential customer counts may have continued to grow, thus contributing to its top-line growth.

However, some parts of its service territories experienced severe weather conditions and tornados. This may have disrupted the smooth flow of electricity to its customers, thus negatively impacting American Electric's overall revenues in the to-be-reported quarter to some extent.

These severe weather patterns may have caused infrastructural damage, thus increasing the company’s operating expenses for storm restoration and repair. This is likely to have dented AEP’s bottom line in the to-be-reported quarter.

On the contrary, favorable rate changes across multiple jurisdictions, lower depreciation and higher off-system sales are likely to have aided the company’s margins, thus boosting its overall bottom line.

Q3 Expectations

The Zacks Consensus Estimate for AEP’s third-quarter revenues is pegged at $5.55 billion. This suggests 0.4% growth from the year-ago quarter.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.75 per share. This indicates an increase of 8% from the prior-year reported figure.

American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. price-eps-surprise | American Electric Power Company, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for American Electric this time. 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, which is not the case here.

Earnings ESP: The company’s Earnings ESP is -1.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AEP carries a Zacks Rank #3 (Hold).

Stocks to Consider

Here are three utility players you may want to consider as these have the right combination of elements to post an earnings beat this season:

Ameren (AEE - Free Report) has an Earnings ESP of +0.22% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for its third-quarter sales, pegged at $2.37 billion, implies growth of 2.9% from the prior-year quarter’s tally. AEE has a four-quarter negative earnings surprise of 8.86%. The Zacks Consensus Estimate for Ameren’s third-quarter earnings is pegged at $1.80 per share.

NiSource Inc. (NI - Free Report) has an Earnings ESP of +18.52% and a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter earnings is pegged at 14 cents per share, suggesting a growth rate of 40% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for NII’s third-quarter sales is pegged at $1.06 billion. This suggests a 2.9% decline from the prior-year reported figure.

Consolidated Edison, Inc. (ED - Free Report) has an Earnings ESP of +3.93% and a Zacks Rank #2. The Zacks Consensus Estimate for Consolidated Edison’s third-quarter revenues is pegged at $3.82 billion, implying a decline of 8.4% from the year-ago quarter.

The Zacks Consensus Estimate for ED’s third-quarter earnings is pegged at $1.58 per share. The company’s four-quarter average earnings surprise is 8.22%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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