The Q3 earnings season is almost over now, with as many as 455 of the S&P 500 Index members having released results so far. Reported earnings were up 3.9% year over year on 2.7% higher revenues.
Overall, for the S&P 500 members, projections are of a 3.4% improvement in earnings on 1.5% higher revenues despite an expected 63.4% plunge in earnings on 12.2% revenue deterioration in the energy space.
Four out of the 16 sectors in the Zacks coverage universe are expected to witness an earnings decline this season. Despite the lower-than-expected performance at these four sectors, this is the first quarter to record positive earnings growth following the five quarters of back-to-back declines. Read more details in our weekly Earnings Preview report.
Let us now focus on the utility sector, which is characterized by its defensive nature and domestic orientation.
This sector is known for being capital intensive. This is because these companies need huge capital for setting up generation facilities, and transmission and distribution infrastructure. They also require considerable funds for upgrading the existing systems to meet emission control standards.
Due to the high capital requirement of this sector, utilities have been benefiting from the rock-bottom interest rate environment. However, talks hinting at a rate hike before the end of the year could hamper the growth momentum of the sector. Nevertheless, we expect above-average weather in the U.S. during the third quarter to boost sales to a large extent.
In the third quarter of 2016, utility earnings (S&P 500) have been up 16.3% on 5.3% higher revenues. Keeping in mind the solid performance for the utility sector, let’s take a look at a few utilities that are scheduled to report earnings on Nov 17.
New Jersey Resources (NJR - Free Report) provides regulated gas distribution, and retail and wholesale energy services to its customers. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% for New Jersey Resources as both the estimates are currently pegged at a breakeven. Our proven model shows that stocks with the combination of a Zacks Rank #1, #2 or #3 (Hold) and a positive ESP have higher chances of beating estimates.
Spark New Zealand Limited , along with its subsidiaries, offers telecommunications, and information and communications technology products and services to its customers globally. The company currently carries a Zacks Rank #3. Spark New Zealand currently has an Earnings ESP is 0.00%.
AquaVenture Holdings Limited (WAAS - Free Report) provides water-related services and solutions to its customers based in North America, the Caribbean, Latin America and the Middle East. The company currently carries a Zacks Rank #3.
The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00% for the company as both the estimates are currently pegged at a loss of 21 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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