The companies belonging to the Zacks
Utilities
sector ensure a continuous supply of electricity, potable water and natural gas and provide wastewater services to millions of customers across the United States. The sector is off to a solid start to the fourth-quarter earnings season, with
NextEra Energy
NEE
beating estimates by 2.5%.
Per the current
Earnings Trends
report, the utility sector’s fourth-quarter earnings are expected to decline 2%, while revenues are estimated to improve 9.6%. So far, only 7.1% of the utilities have reported fourth-quarter results, registering 5.2% earnings growth on the back of 14.4% revenue growth.
Factors Likely to Impact Q4 Results
A transition in the utility space is quite evident. The utilities remained focused on making systematic investments to add renewable energy sources to their generation portfolios and reduce emissions. Investment in expanding and strengthening transmission and distribution lines is making the infrastructure more resilient and enabling utilities to provide 24X7 services to customers even during adverse climatic conditions.
Despite the threat of the new variant of COVID-19, the overall improvement in economic conditions in the United States and the restart of commercial and industrial activities are creating fresh demand for utility services. The increasing customer base of the utilities is expected to have boosted their fourth-quarter performance.
Utilities have been focused on increasing their operational efficiency and enabling efficient usage of electricity by customers. The new utility rates approved by different commissions across the United States are also likely to have positively impacted fourth-quarter earnings.
Per the National Oceanic and Atmospheric Administration release, the December contiguous U.S. temperature was 39.3 degrees F, 6.7 degrees above average, making it the warmest December on record. No doubt, warmer-than-normal weather conditions in December 2021 are likely to have adversely impacted the demand for utility services.
Picking Winners From the Utility Space
Choosing the right stock for one’s portfolio from too many participants is certainly a tough job. An easy way to streamline the list is by selecting stocks with the combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Per our proprietary methodology, Earnings ESP is a determining factor for zeroing in on stocks with the maximum chances of beating on earnings. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Our research shows that stocks with the right combination of the two key ingredients have 70% higher chances of delivering an earnings surprise.
For investors looking to find winners, we have highlighted four Utility stocks that are poised to beat fourth-quarter earnings estimates.
Our Utility Bets for Q4
Service territories of Detroit, MI-based
DTE Energy Company
DTE
— experienced inconsistent weather conditions during the quarter, which is likely to have had an adverse impact on demand. Nonetheless, a favorable tax reversal is expected to have boosted the bottom line.
DTE Energy has an Earnings ESP of +1.06% and a Zacks Rank #3. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
DTE Energy is scheduled to report quarterly results on Feb 10.
DTE Energy Company Price and EPS Surprise
DTE Energy Company price-eps-surprise
|
DTE Energy Company Quote
Fourth-quarter earnings of Richmond, VA-based
Dominion Energy Inc.
D
— which provides electric and natural gas services to millions of customers in the United States — are likely to have benefited from regulated investment and improving sales from commercial and industrial customer groups. Earnings in the quarter are likely to have been adversely impacted by COVID deferred operating and maintenance expenses.
Dominion Energy has an Earnings ESP of +0.09% and a Zacks Rank #3. Dominion is scheduled to report quarterly results on Feb 11.
Dominion Energy Inc. Price and EPS Surprise
Dominion Energy Inc. price-eps-surprise
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Dominion Energy Inc. Quote
Fourth-quarter earnings of Springfield, MA-based
Eversource Energy
ES
— which engages in the delivery of electricity, natural gas, and water to customers — are likely to have benefited from higher contributions from transmission and distribution businesses. Cost-management initiatives are also likely to have boosted margins and strengthened its performance in the fourth quarter.
Eversource Energy has an Earnings ESP of +0.36% and a Zacks Rank #3. Eversource Energy is scheduled to report quarterly results on Feb 17.
Eversource Energy Price and EPS Surprise
Eversource Energy price-eps-surprise
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Eversource Energy Quote
Continued economic recovery in the service territories of St. Louis, MO -based
Ameren Corporation
AEE
— involved in the generation and distribution of electricity and natural gas to residential, commercial, industrial, and wholesale customers — must have resulted in higher electric sales, thereby boosting fourth-quarter earnings. Cost-management programs of Ameren are likely to have contributed favorably to its fourth-quarter bottom-line performance.
Ameren has an Earnings ESP of +1.00% and a Zacks Rank #3. AEE is scheduled to report quarterly results on Feb 18.
Ameren Corporation Price and EPS Surprise
Ameren Corporation price-eps-surprise
|
Ameren Corporation Quote
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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