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What's in Store for American Electric (AEP) in Q4 Earnings?

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American Electric Power Company, Inc. (AEP - Free Report) is set to release fourth-quarter and 2019 results on Feb 20, before market open. In the last reported quarter, the company delivered positive earnings surprise of 9.77%.

Moreover, in the trailing four quarters, American Electric came up with average positive earnings surprise of 5%.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

During the first half of fourth-quarter 2019, the majority of the company's service territories witnessed warmer-than-normal temperatures, while in the second half, particularly in December, cold weather conditions were observed. The conditions are likely to have boosted electricity demand in American Electric’s service territory, which, in turn, must have supported its top line.

The company has also been experiencing favorable rate case outcomes trend, which we believe must have contributed to its quarterly top line.

Moreover, additional oil and gas related expansions in the development pipeline are likely to have aided American Electric’s growth.

The Zacks Consensus Estimate for American Electric’s fourth-quarter revenues is pegged at $4.06 billion, indicating a rise of 6.8% from the year-ago quarter figure.

However, in the fourth quarter, some extensive parts of the company’s territories experienced tropical storms and cyclones. These may have pushed up American Electric’s infrastructural costs for restoring smooth flow of electricity. This, in turn, might have weighed on the company’s bottom line in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at 60 cents per share, suggesting 16.7% decline from the year-ago quarter reported figure.

In October 2019, the company raised its quarterly dividend by 4.5% to 70 cents per share. This indicates strong cash inflow for the company, which its upcoming results should duly reflect.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for American Electric 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. This is not the case here.

Earnings ESP: American Electric has an Earnings ESP of -0.14%. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a few players from the Utilities sector that have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Public Service Enterprise Group PEG has an Earnings ESP of +2.01% and a Zacks Rank #3. The company is set to announce fourth-quarter 2019 earnings on Feb 26.

The AES Corp AES has an Earnings ESP of +0.76% and a Zacks Rank #3. The company will announce fourth-quarter 2019 earnings on Feb 28.

CenterPoint Energy CNP has an Earnings ESP of +1.09% and a Zacks Rank #3. The company will announce fourth-quarter 2019 earnings on Feb 27.

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