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Can Duke Energy (DUK) Pull Off a Surprise in Q2 Earnings?

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Duke Energy Corp. (DUK - Free Report) , an electric and natural gas utility based in Charlotte, NC, is set to report second-quarter 2017 results on Aug 3, before the opening bell.

Last quarter, the company saw a negative earnings surprise of 1.89%. However, it surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average positive earnings surprise of 2.94%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

Being a premier utility service provider, Duke Energy continues to invest in electric and gas infrastructure, along with retail and wholesale customer growth. Management believes that in 2017 the company will perform favorably in the electric business driven by base rate increases in Duke Energy Progress South Carolina and the generation base rate adjustment mechanism in Florida.

Meanwhile, Duke Energy maintains its commitment to reduce its operations and maintenance costs. Hence, we expect the company’s second-quarter results to reflect these scores.

On the flip side, the company's service territories witnessed warmer-than-normal temperatures during the quarter. This will result in lower household expenditure on heating and, in turn, might adversely impact revenues for the energy provider.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings reflects a decrease of 5.14% year over year, while the consensus for revenues is $5.54 billion, implying 1.05% year-over-year growth.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Duke Energy this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: Duke Energy has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.01. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: Duke Energy carries a Zacks Rank #2, which when combined with an ESP of 0.00% makes surprise prediction difficult.

Note that, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are a few stocks in the Utility space worth considering on the basis of our model which shows that they have the right combination to pull off a beat:

NiSource, Inc. (NI - Free Report) will report second-quarter results on Aug 2. The company has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy Group, Inc. (PEGI - Free Report) has an Earnings ESP of +23.08% and a Zacks Rank #2. The company is expected to report second-quarter results on Aug 4.

Pinnacle West Capital Corporation (PNW - Free Report) has an Earnings ESP of +4.31% and a Zacks Rank #3. The company is slated to release second-quarter results on Aug 3.

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