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CenterPoint Energy (CNP) Q2 Earnings: Is a Beat in Store?

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CenterPoint Energy (CNP - Free Report) is set to report second-quarter 2018 results on Aug 3, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 25%. Also, it surpassed the Zacks Consensus Estimate in three of the past four quarters, the average beat being 17.06%.

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

Why a Likely Positive Surprise?

Our proven model shows that CenterPoint Energy is likely to beat estimates this quarter. That is because it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: CenterPoint Energy has an Earnings ESP of +0.93%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2, which along with a positive Earnings ESP indicates a positive surprise prediction.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcement.

CenterPoint Energy, Inc. Price and EPS Surprise

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

Factors at Play

At the onset of the second quarter, the company's major service territories witnessed colder-than- normal temperatures, alongside witnessing a snowstorm in April. This is likely to cause a higher household expenditure on heating, which, in turn, will most likely boost the revenues for this electricity provider.

In later part of the quarter, the company’s service territories witnessed warmer-than-normal temperature, which should lead to a rise in electricity demand in these regions. Thus, overall the climate during the second quarter remained favorable for the company’s revenue growth. In line with this, the Zacks Consensus Estimate for the company’s second-quarter revenues of $2,159 million reflects an improvement of 0.8% year over year.

Furthermore, in the second quarter, CenterPoint Energy completed and energized its Brazos Valley Connection (BVC) transmission project. The project, which was supposed to be complete by June, was wrapped up ahead of schedule. This should have a positive impact on the company's bottom line in the second-quarter results, as CenterPoint Energy won’t be incurring any further additional costs related to project completion.

Expected revenue growth from favorable temperature at its service territories, along with anticipated lower costs, should boost the bottom line. In line with this, the Zacks Consensus Estimate for CenterPoint Energy’s second-quarter earnings is pegged at 32 cents, reflecting an annual improvement of 10.3%.

Stocks That Warrant a Look

Here are some companies from the Utility sector you may want to consider, as our model shows that these have the right combination of elements to post earnings beat this quarter:

Alliant Energy (LNT - Free Report) has an Earnings ESP of +1.10% and carries a Zacks Rank #2. It is slated to report second-quarter results on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren Corporation (AEE - Free Report) has an Earnings ESP of +1.69% and carries a Zacks Rank #2. It is slated to report second-quarter results on Aug 3.

Duke Energy (DUK - Free Report) has an Earnings ESP of +0.52% and a Zacks Rank #3. It is expected to report second-quarter 2018 results on Aug 2.

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