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4 Utility Stocks Set to Outpace Q4 Earnings Estimates

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·4 min read
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The Zacks Utilities sector is expected to see 3.2% year-over-year earnings decline but 0.3% revenue growth this earnings season. A top tier utility, NextEra Energy NEE recently reported fourth-quarter results, beating the Zacks Consensus Estimate for earnings.

For more details, refer to our latest Earnings Preview.

What Will Favor Utility Stocks?

Utilities provide 24x7 electricity, natural gas and water to millions of customers across the United States. New electric and water rates, increase in customers, as well as proper management of expenses likely have had a positive impact on utilities’ earnings.

The near-zero interest rates aided capital-intensive utility stocks to fund and continue with capital projects despite the challenges created by the pandemic. Strengthening of infrastructure has allowed the utilities to provide services and quickly restore operations after natural calamities. The gradual reopening of economic activities continued to a have positive impact on demand for utility services from the commercial and industrial space. Demand from the residential space remained strong in fourth-quarter 2020.

A clear transition is evident in the utility space, with utilities moving away from older, inefficient and higher-pollution generating units toward cleaner as well as more affordable alternatives. Increasing usage of renewable sources, development of affordable battery storage units and usage of new technology are helping the utilities to cut down emissions and provide affordable energy to customers.

Ways to Pick Winners in 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 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 seeking to apply this proven model to their portfolio, we have highlighted four Utility stocks that are poised to beat fourth-quarter earnings estimates.

Our Utility Selections

Tulsa, OK-based ONEOK Inc. OKE is an energy company that is engaged in natural gas and natural gas liquids businesses.

ONEOK currently has a Zacks Rank of 2 and an Earnings ESP of +2.98%. You can see the complete list of today’s Zacks #1 Rank stocks here.

It is scheduled to announce quarterly numbers on Feb 22.

ONEOK, Inc. Price and EPS Surprise

ONEOK, Inc. Price and EPS Surprise
ONEOK, Inc. Price and EPS Surprise

ONEOK, Inc. price-eps-surprise | ONEOK, Inc. Quote

Atlanta, GA-based The Southern Company SO deals with the generation, transmission and distribution of electricity.

Southern Company currently has a Zacks Rank of 3 and an Earnings ESP of +1.05%. It is scheduled to announce quarterly numbers on Feb 18.

Southern Company The Price and EPS Surprise

Southern Company The Price and EPS Surprise
Southern Company The Price and EPS Surprise

Southern Company The price-eps-surprise | Southern Company The Quote

Chicago, IL-based Exelon Corporation EXC is a utility services holding company that operates through its subsidiaries. The company has presence in every stage of the energy business: power generation, competitive energy sales, and transmission and delivery.

Exelon currently has a Zacks Rank of 3 and an Earnings ESP of +2.34%. It is scheduled to announce quarterly numbers on Feb 24.

Exelon Corporation Price and EPS Surprise

Exelon Corporation Price and EPS Surprise
Exelon Corporation Price and EPS Surprise

Exelon Corporation price-eps-surprise | Exelon Corporation Quote

Bryn Mawr, PA-based Essential Utilities Inc. WTRG — through its subsidiaries — operates regulated utilities that provide water/wastewater and natural gas services in the United States.

The company currently has a Zacks Rank of 3 and an Earnings ESP of +0.75%. It is scheduled to announce quarterly numbers on Feb 24.

Essential Utilities Inc. Price and EPS Surprise

Essential Utilities Inc. Price and EPS Surprise
Essential Utilities Inc. Price and EPS Surprise

Essential Utilities Inc. price-eps-surprise | Essential Utilities Inc. Quote

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Southern Company The (SO) : Free Stock Analysis Report

ONEOK, Inc. (OKE) : Free Stock Analysis Report

Exelon Corporation (EXC) : Free Stock Analysis Report

NextEra Energy, Inc. (NEE) : Free Stock Analysis Report

Essential Utilities Inc. (WTRG) : Free Stock Analysis Report

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