Will TECO Energy (TE) Surprise This Earnings Season? - Analyst Blog
TECO Energy, Inc. (TE) is scheduled to report its fourth-quarter 2014 results before the opening bell on Feb 5, 2015. Last quarter, the company posted a negative earnings surprise of 3.03%. Let’s see how things are shaping up for the fourth quarter.
Factors Affecting This Quarter
In Sep 2014, TECO Energy completed the acquisition of New Mexico Gas Intermediate, the parent of New Mexico Gas Company. The transaction enabled the company to add over 513,000 gas customers to its portfolio and reinforce its footprint in New Mexico. It is expected to be accretive to fourth-quarter 2014 earnings.
Steady growth in customer count backed by a gradual improvement in Florida’s economy continues to boost TECO Energy’s results and is expected to drive future results as well.
On the flip side, despite reporting higher revenues, increasing expenses could impact TECO Energy’s margins adversely.
In addition, we are concerned about mounting environmental regulations to curb carbon emission during electricity generation. Coal continues to dominate TECO Energy’s generation mix with an approximate 61% share at 2013 end. The company has already installed scrubbers and will likely invest in the execution of pollution-control initiatives at its utilities. This might dent the company’s profitability to a large extent, going forward.
Earnings Whispers?
Our proven model does not conclusively show that TECO Energy will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate Estimate of 21 cents is on par with the Zacks Consensus Estimate.
Zacks Rank: TECO Energy’s Zacks Rank #3 when combined with a 0.00% ESP makes an earnings beat difficult to predict.
However, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the utility sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
PNM Resources, Inc. (PNM) has an earnings ESP of +8.70% and carries a Zacks Rank #2.
PG&E Corporation (PCG) has an earnings ESP of +3.70% and carries a Zacks Rank #2.
Wisconsin Energy Corp. (WEC) has an earnings ESP of +1.75% and carries a Zacks Rank #2.
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TECO ENERGY (TE): Free Stock Analysis Report
WISC ENERGY CP (WEC): Free Stock Analysis Report
PG&E CORP (PCG): Free Stock Analysis Report
PNM RESOURCES (PNM): Free Stock Analysis Report
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