The Utility sector has positive earnings growth expectations for the fourth quarter. Out of the 16 sectors in the Zacks coverage universe, the Utility sector is among the 9 sectors that are expected to register positive earnings growth this season. The Utility sector’s fourth-quarter 2019 earnings are expected to rise 15.8% year over year on 2.9% revenue growth. For more details on quarterly releases, you can go through the latest Earnings Outlook.
Factors Likely to Drive Q4 Results
Mature Utility companies are domestic focused and provide 24x7 basic services. They consistently make huge investments to maintain their infrastructure and carry out upgrades on a regular basis. These companies need constant funding to continue the capital projects. Three rate cuts since July 2019 are likely to have lowered utilities’ cost of capital, which in turn might have positively impacted margins and the bottom line.
Proper cost-management initiatives, increasing operating efficiencies, focus on environment-friendly generation, addition of energy storage projects, launch of technologies to maintain transmission and distribution lines, as well as gradual introduction of smart meters have improved service quality and reliability. Customer growth and new rates in their service territories are likely to have had a positive impact on Utilities’ fourth-quarter earnings.
Utilities to Watch Out for
Let's take a look at some Utility stocks that are scheduled to report fourth-quarter 2019 earnings on Feb 11.
Dominion Energy Inc. (D - Free Report) delivered average positive earnings surprise of 0.1% in the last four quarters. The company’s fourth-quarter earnings are expected to have gained from regulated investment across electric and gas businesses, as well as contribution from Southeast Energy Group.
Our proven model doesn’t conclusively predict an earnings beat for Dominion Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dominion Energy has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read more: What's in the Cards for Dominion Energy's Q4 Earnings?)
Exelon Corporation (EXC - Free Report) delivered average negative earnings surprise of 0.1% in the trailing four quarters. The sudden spike in demand due to unreasonably cold weather in Illinois in November was addressed by continued operation of its six nuclear plants therein. This is likely to have a positive impact on its results in the to-be-reported quarter. Exelon has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read more: Exelon to Report Q4 Earnings: What's in the Offing?)
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