The fourth-quarter earnings season is underway, with 136 S&P 500 members having already reported their respective quarterly results (as of Jan 29). Total earnings for these companies are up 12.6% from the same period last year on 5.9% higher revenues. For more details, kindly refer to our latest Earnings Outlook report.
This week is going to be one of the busiest of the earnings season, with more than 431 companies slated to report quarterly results. Let's concentrate on the domestic-focused matured Utility sector and find out how it is poised to perform this season. The Autos and the Utility sector is likely to register a decline in earnings. On the contrary, other 14 of the 16 Zacks sectors are likely to come up with improved year-over-year earnings.
The Utility sector's fourth-quarter earnings are expected to decline 7.3% year over year on 2.6% fall in revenues. Rising interest rates continue to be a concern for the capital-intensive utility stocks. Interest rate hikes increase the utilities' cost of capital, impacting margins and comprising on their ability to pay or hike dividend rates.
However, the utility stocks are expected to gain from the new rates in their service territories, customer growth, coupled with effective management and control of expenses through the introduction of new technology, all of which should positively impact fourth-quarter earnings.
Let's take a look at some Utility stocks that are scheduled to report fourth-quarter 2018 earnings on Jan 31 and find out how things are shaping up prior to the announcement.
Xcel Energy Inc. (XEL - Free Report) delivered average positive earnings surprise of 4.51% in the last four quarters. The company’s disciplined investments in infrastructure projects, focus on renewable expansion and demand, driven by improvement in economic conditions, will act as growth catalysts. (Read more: Xcel Energy to Report Q4 Earnings: Is a Beat in Store?)
Xcel Energy Inc. Price and EPS Surprise
Xcel Energy has an Earnings ESP of +0.39% and currently carries a Zacks Rank #3 (Hold), which is a favorable combination that indicates 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 (Buy) or 3 to be able to beat estimates. You can see the complete list of today's Zacks #1 Rank stocks here.
CMS Energy Corporation (CMS - Free Report) delivered average positive earnings surprise of 6.37% in the trailing four quarters. The company’s robust investment in infrastructure development projects will stimulate earnings growth in the quarter to be reported.
CMS Energy has an Earnings ESP of +0.49% and currently sports a Zacks Rank #1, which is a favorable combination, indicating a likely positive earnings surprise this season. (Read more: CMS Energy to Report Q4 Earnings: Is a Beat in Store?)
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Unitil Corporation (UTL - Free Report) delivered average positive earnings surprise of 216.98% in the last four quarters. Expanding service areas and customer base are likely to have a positive impact on fourth-quarter earnings of the company.
Currently, Unitil has a Zacks Rank #2 and an Earnings ESP of 0.00%, which is a not indicative of an earnings beat in the to-be-reported quarter.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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