So far, a handful of the S&P 500 members from the Zacks Utilities sector have released their fourth-quarter earnings. Another cohort of major utility stocks, including Dominion Energy (D Quick QuoteD - Free Report) , PG&E Corp. (PCG Quick QuotePCG - Free Report) , Edison International (EIX Quick QuoteEIX - Free Report) , Ameren (AEE Quick QuoteAEE - Free Report) , Entergy (ETR Quick QuoteETR - Free Report) and Clearway Energy (CWEN Quick QuoteCWEN - Free Report) , is set to announce quarterly reports on Feb 22.

Factors to Consider

Domestic-focused utility companies continue to focus on cost management and implementation of energy-efficiency programs, which reduces their operating, fuel, maintenance and upkeep expenses. As a result, customers can save money on their utility bills, thereby adding to the sector’s customer base.

Favorable rate revision and customer additions have been creating fresh demand, which boosts the top-line performance of utility providers. Moreover, investment in strengthening the infrastructure has been allowing utilities to provide services even during extreme conditions, leading to stable earnings. These factors are expected to contribute to the sector’s fourth-quarter results.

Weather remained warmer than normal for most of the fourth quarter across the utilities’ service territories, accompanied with precipitation ranging from below to average. In late October and November, some of the regions experienced snowfall. Overall, the weather is expected to have had a moderate effect on utilities' fourth-quarter top-line performance.

Further, utilities have been aggressively adding more renewable and clean energy sources to their production portfolios, and cutting down the use of coal and other polluting sources in their generation portfolios. Many utilities have already pledged to provide 100% electricity from clean sources in the next few decades. We expect the fourth-quarter results from utility companies to reflect such clean energy developments.

However, the fact that utilities need massive funds to upgrade, maintain and expand their infrastructure and operations, has made their operations difficult in the current interest rate scenario. Thus, the capital-intensive utilities are likely to have experienced higher borrowing costs, thanks to the high interest rate environment that prevailed in the United States during the fourth quarter. Consequently, higher interest expenses might have hurt the sector’s bottom-line performance to some extent.

Q4 Expectations

Total fourth-quarter earnings of Utility stocks are expected to improve 15.3% year over year on a decline of 4.7% in revenues.

For more details on quarterly releases, you can go through our latest Earnings Outlook.

Utilities' Earnings in Focus

Let's take a look at the following utility companies that are scheduled to post their quarterly report on Feb 22, and find out how things might have shaped up prior to the announcements.

Dominion Energy delivered a four-quarter average earnings surprise of 3.27%. Economic development, population growth in Virginia and South Carolina, and an increase in customers in its electric distribution business are likely to have boosted D’s earnings in the fourth quarter.

However, the planned outage of Millstone Power Station and high interest rates might have negatively impacted the company’s quarterly results. (read more: Dominion Energy to Post Q4 Earnings: What's in Store?).

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.

Dominion Energy has an Earnings ESP of +0.63% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PG&E Corp. delivered a four-quarter average earnings surprise of 14.29%. Favorable outcomes expected from the company’s 2023 general rate case (GRC) as well as revenue authorized in the Wildfire Mitigation and Catastrophic Events (WMCE) proceedings must have bolstered PCG’s fourth-quarter revenue performance.

Lower non-fuel operation and maintenance expenses must have boosted its earnings in the soon-to-be-reported quarter..

PCG currently has an Earnings ESP of -0.55% and a Zacks Rank #2 (read more:PG&E to Report Q4 Earnings: Here's What to Expect).

Edison International delivered a four-quarter average earnings surprise of 3.37%. A warmer-than-normal weather pattern, accompanied with below-normal precipitation, might have positively impacted the company’s overall revenues.

Higher interest expenses might have hurt EIX's bottom-line performance.

EIX currently has an Earnings ESP of -3.90% and a Zacks Rank #3 (read more: What Awaits Edison International in Q4 Earnings?).

Ameren delivered a four-quarter average earnings surprise of 9.54%. Strong rate-based growth, fueled by increased investments in its infrastructure in the prior quarters, might have aided AEE’s fourth-quarter top line.

However, higher interest expenses might have negatively impacted its overall fourth-quarter earnings.

AEE currently has an Earnings ESP of 0.00% and a Zacks Rank #3 (read more: Ameren to Report Q4 Earnings: What's in the Cards?).

Entergy delivered a four-quarter average earnings surprise of 4.35%. Entergy’s service territories witnessed an above-normal weather pattern, with a few regions recording their highest maximum temperature during October. Such a weather pattern might have contributed to Entergy’s top-line performance in the to-be-reported quarter.

Strong industrial sales, on account of new and expanding customers and favorable regulatory outcomes, might have aided the company’s overall quarterly bottom-line performance.

ETR currently has an Earnings ESP of +1.45% and a Zacks Rank #3 (read more: Entergy to Report Q4 Earnings: What's in the Offing?).

Clearway Energy delivered a four-quarter average earnings surprise of 19.20%. The consensus estimate for its fourth-quarter sales is pegged at $283.6 million, implying an improvement of 5.8% from the year-ago quarter’s reported number.

The consensus estimate for its fourth quarter earnings is pegged at 16 cents per share, implying an improvement of 60% from the year-ago quarter’s reported actuals. The estimate also moved north 33.3% over the last 60 days.

CWEN currently has an Earnings ESP of 0.00% and a Zacks Rank #3.

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