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FirstEnergy (FE) Q2 Earnings: Stock Likely to Beat Estimates

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We expect FirstEnergy Corp. (FE - Free Report) to beat expectations when it reports second-quarter 2016 results on Jul 28, after the market closes.

Last quarter, the company posted a 5.26% positive earnings surprise, with an average positive surprise of 7.12% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that FirstEnergy is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +5.56%. This is because the Most Accurate Estimate is pegged at 57 cents while the Zacks Consensus Estimate stands lower at 54 cents. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank: FirstEnergy currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks #1 (Strong Buy), #2 (Buy) and #3 have a significantly higher chance of beating earnings. The combination of FirstEnergy’s Zacks Rank #3 and +5.56% ESP makes us reasonably confident of an earnings beat this season.

Sell-rated stocks (#4 or #5), on the other hand, should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

FIRSTENERGY CP Price and EPS Surprise

FIRSTENERGY CP Price and EPS Surprise | FIRSTENERGY CP Quote

What’s Driving the Better-than-Expected Results?

FirstEnergy operates one of the largest transmission networks in the U.S. and systematically invests capital to improve its quality of services and enhance the reliability of electric systems. This helps the company to retain existing customers as well as to attract new ones.

Moreover, warmer-than-usual temperatures during the second quarter in FirstEnergy’s service territories are expected to drive its topline.

Other Stocks to Consider

FirstEnergy is not the only company looking up this earnings season. We also see likely earnings beats coming from these three industry peers.

DTE Energy Company (DTE - Free Report) has an Earnings ESP of +2.20% and a Zacks Rank #2. It is scheduled to report earnings on Jul 26.

Pattern Energy Group Inc. has an Earnings ESP of +100.00% and a Zacks Rank #2. It is expected to report earnings on Aug 8.

Avista Corp. (AVA - Free Report) has an earnings ESP of +2.33% and a Zacks Rank #2.It is slated to report earnings on Aug 3.

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