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Utility Stocks' Q2 Earnings Due on Aug 2: LNT, DUK & More

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The Q2 earnings season is past the halfway mark, with total earnings of the 265 S&P 500 members that have already reported being up 23.6% from the same period last year on 10.1% higher revenues. Per our latest Earnings Preview report, overall second-quarter earnings for all the S&P 500 members are expected to be up 23.6% on 8.8% revenue growth.

Let's concentrate on the domestic-focused matured Utility sector and find out how it is poised to perform this season. This sector, along with 14 of the 16 Zacks sectors, is likely to come up with improved year-over-year earnings. Currently, the Autos and the Conglomerates sector is likely to register a decline in earnings.

The Utility sector's earnings in the second quarter are expected to increase 8.2% year over year on 0.3% revenue growth, courtesy of expected stable performance by most of the utilities. The utility stocks are expected to gain from the new rates in their service territories, customer growth and effective management of expenses, all of which should have a positive impact on second-quarter earnings.

Unemployment rate in the United States during the second quarter was in the range of 3.8-4.0%. This historic low level of unemployment boosted demand for new housing units and in turn the requirement for utility services. Per a U.S. Energy Information Administration ("EIA") report, electricity demand from residential, commercial and industrial sectors during the first half of 2018 improved from the year-ago period.

However, these utilities do have their share of challenges such as a rising debt level, stringent regulations and the hurricane season, which can wreak havoc on infrastructure. Rising interest rates (the Federal Reserve hiked interest rates in June, marking the seventh increase since December 2015) make bonds a strong investment option compared with utility investment. Despite the rate hikes, we find some of the utilities fundamentally strong enough to come up with positive earnings surprise this season.

Let's take a look at some Utility stocks scheduled to report second-quarter 2018 earnings on Aug 2 and how things are shaping up prior to the announcement.

Alliant Energy Corporation (LNT - Free Report) delivered a positive earnings surprise of 1.96% in the last reported quarter. Its second-quarter 2018 earnings are expected to benefit from robust capital expenditure plans and constructive regulatory decisions. (Read more: Alliant Energy to Report Q2 Earnings: A Beat in Store?)

Alliant Energy has an Earnings ESP of +1.10% and a Zacks Rank #2 (Buy), which is a favorable combination indicating a likely positive earnings surprise this season. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 or #3 (Hold) to be able to beat estimates. You can see the complete list of today's Zacks #1 Rank stocks here .

Duke Energy Corporation (DUK - Free Report) delivered a positive earnings surprise of 11.30% in the last reported quarter. The company is expected to benefit from the new rates and favorable weather conditions in its service territories during the second quarter. (Read more: Duke Energy to Report Q2 Earnings: Is a Beat in Store?)

Duke Energy has an Earnings ESP of +0.52% and a Zacks Rank #3, which is a favorable combination indicating a likely positive earnings surprise this season.

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

SCANA Corporation (SCG - Free Report) reported a negative earnings surprise of 18.1% in the last reported quarter. The company has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult this season. (Read more: SCANA to Report Q2 Earnings: What's in the Cards?)

SCANA Corporation Price and EPS Surprise

SCANA Corporation Price and EPS Surprise | SCANA Corporation Quote

Exelon Corporation (EXC - Free Report) delivered a positive earnings surprise of 3.23% in the last reported quarter. The company is expected to benefit from its cost management initiatives through improved efficiency and productivity.

Exelon Corporation Price and EPS Surprise

Exelon Corporation Price and EPS Surprise | Exelon Corporation Quote

Exelon Corporation has an Earnings ESP of +0.39% and a Zacks Rank #2, which is a favorable combination indicating a likely positive earnings surprise this season. (Read more: Is a Beat in Store for Exelon This Earnings Season?)

NRG Energy Inc. (NRG - Free Report) reported breakeven earnings of 87 cents in the last reported quarter. The company is expected to benefit from the Transformation Plan. NRG Energy has an Earnings ESP of 0.00% and a Zacks Rank #3, making surprise prediction difficult this season. (Read more: What's in Store for NRG Energy This Earnings Season?)

NRG Energy, Inc. Price and EPS Surprise

NRG Energy, Inc. Price and EPS Surprise | NRG Energy, Inc. Quote

Consolidated Edison Inc. (ED - Free Report) delivered a positive earnings surprise of 3.01% in the last reported quarter. The company’s second-quarter results might be impacted by higher expenditure in its electric delivery systems. (Read more: Consolidated Edison Q2 Earnings: What's in the Cards?)

Consolidated Edison Inc Price and EPS Surprise
 

Consolidated Edison Inc Price and EPS Surprise | Consolidated Edison Inc Quote

Consolidated Edison has an Earnings ESP of -0.89% and a Zacks Rank #3, indicating a likely negative surprise this season.

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