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AES Corp. (AES) to Report Q1 Earnings: What's in the Cards?

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The AES Corporation (AES - Free Report) is scheduled to release first-quarter 2020 results on May 7, before the opening bell. In the last-reported quarter, this utility delivered a positive surprise of 6.06%.

Moreover, the company’s earnings surpassed the Zacks Consensus Estimate on two occasions and missed on the other two, with the average four-quarter positive surprise being 3.92%.

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

Factors to Consider

In the first quarter, AES Corp’s service territories witnessed mixed weather patterns. While most of its service areas experienced warmer-than-normal temperature, a few witnessed heavy rainfall and moderate-to-heavy snowfall. We expect the company’s revenues in the soon-to-be-reported quarter to have been impacted by these factors.

Meanwhile, its strategic investment in Uplight, which provides end-to-end customer centric utility-related technology solutions, has been boosting AES Corp’s top line and margin. We expect Uplight to have maintained its usual trend and contributed to the utility provider’s quarterly revenues.

Notably, the Zacks Consensus Estimate for first-quarter revenues is pegged at $2.66 billion, which indicates 0.4% increase from the year-ago quarter’s reported figure.

The AES Corporation Price and EPS Surprise

The AES Corporation Price and EPS Surprise

The AES Corporation price-eps-surprise | The AES Corporation Quote

Factors like efficiency gains from cost-cutting initiatives and a lower interest expense due to refinancing benefits and completed debt production are likely to have bolstered AES Corp’s bottom line in the first quarter. As AES Corp.’s energy storage business, Fluence, has been expanding its capabilities, management remains optimistic about its margin performance. Notable margin growth is likely to have led to earnings growth in the soon-to-be-reported quarter.

Currently, the Zacks Consensus Estimate for first-quarter earnings is pegged at 34 cents, indicating year-over-year improvement of 21.4%.

Key Development

AES Corp. announced on Mar 30, 2020,  the completion of the divestiture of about 51 acres of coastal land in Redondo Beach, CA, to a private developer. The deal includes a commitment to shut the plant by the end of 2023. We expect an update on this deal along with the first-quarter results.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AES Corp. this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AES Corp currently carries a Zacks Rank #2. 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 when they report results.

NewJersey Resources (NJR - Free Report) has an Earnings ESP of +3.86% and a Zacks Rank #3. The company will release first-quarter earnings on May 8.

Algonquin Power & Utilities (AQN - Free Report) has an Earnings ESP of +1.59% and a Zacks Rank #2. The company is set to announce first-quarter results on May 7.

Spire Inc. (SR - Free Report) has an Earnings ESP of +0.17% and a Zacks Rank #3. The company is set to announce second-quarter fiscal 2020 results on May 8.

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