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AES Corp. (AES) to Report Q2 Earnings: What's in the Cards?

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Zacks Equity Research
·4 min read
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The AES Corporation AES is scheduled to release second-quarter 2020 results on Aug 6, before the opening bell. In the last-reported quarter, this utility delivered a negative earnings surprise of 9.38%.

The company’s earnings surpassed the Zacks Consensus Estimate on two occasions and missed on the other two, with the average four-quarter surprise being 3.25%.

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

Factors to Consider

In the second quarter, AES Corp’s service territories witnessed moderate weather patterns, which are likely to have contributed to the company’s revenues in the soon-to-be-reported quarter. Also, contributions from new renewable projects are expected to have boosted its second-quarter performance.

The AES Corporation Price and EPS Surprise

The AES Corporation Price and EPS Surprise
The AES Corporation Price and EPS Surprise

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

However, courtesy of the coronavirus impact, the company has been witnessing reduced electricity demand from its commercial and industrial customers. This might have been offset by increased residential demand as more work-from-home options were adopted by employees.

Notably, the Zacks Consensus Estimate for second-quarter revenues is pegged at $2.50 billion, which indicates 0.6% increase from the year-ago quarter’s reported figure.

AES Corp.’s management expects a drastic demand drop in the company’s key markets to drag down its 2020 earnings by 7 cents. We expect AES Corp’s second-quarter bottom line to have witnessed a partial impact. Moreover, the company is likely to have incurred a higher interest expense in the second quarter, as a result of drawing on its revolving credit facilities to reinforce liquidity. This might also have weighed on the company’s quarterly earnings.

Currently, the Zacks Consensus Estimate for second-quarter earnings is pegged at 23 cents, indicating a decline of 11.5% from the year-ago quarter’s reported figure.

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. That 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 #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

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

Pinnacle West Capital Corporation PNW is set to release second-quarter earnings on Aug 6. It has an Earnings ESP of +5.07% and a Zacks Rank #3, presently.

CenterPoint Energy, Inc. CNP is expected to release second-quarter numbers on Aug 6. It has an Earnings ESP of +7.87% and a Zacks Rank of 3 currently.

Recent Utility Releases

NextEra Energy NEE reported second-quarter 2020 adjusted earnings of $2.61 per share, surpassing the Zacks Consensus Estimate of $2.50 by 4.4%.

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