U.S. Markets closed

What's in the Cards for FirstEnergy (FE) in Q1 Earnings?

Zacks Equity Research

FirstEnergy Corporation FE will release first-quarter 2017 financial results after the market closes on Apr 27. Last quarter, this independent electric power operator reported a negative earnings surprise of 2.56%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider

FirstEnergy expects earnings per share for the first quarter to be in the range of 65–75 cents per share. However, this expected earnings range is lower than the first-quarter 2016 operating earnings of 80 cents per share.

Earlier during the first quarter, new rates were approved by Pennsylvania Public Utility Commission (PPUC) and which became effective from Jan 27. The new rates will boost first-quarter revenue and increase the annual revenue from Pennsylvania region by approximately $291 million.
The New Jersey Board of Public Utilities approved the Stipulation of Settlement, which provided for an annual $80 million distribution revenue increase effective from Jan 1.

We believe the warmer winter in service territories could have an adverse impact on demand for utility services.

FirstEnergy Corporation Price and EPS Surprise


FirstEnergy Corporation Price and EPS Surprise | FirstEnergy Corporation Quote

Earnings Whispers

Our proven model does not conclusively show that FirstEnergy is likely to beat estimates 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) for this to happen. But that is not the case here, as you will see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Most Accurate estimate is 70 cents, while the Zacks Consensus Estimate is pegged higher at 71 cents, resulting in an Earnings ESP of -1.41%.

Zacks Rank: FirstEnergy carries a Zacks Rank #3. Though the Zacks Rank #3 increases the possibility of a beat, a -1.41% ESP makes earnings beat unlikely this season.

We caution against Sell-rated stocks (#4 or #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Instead, here are a few players in the electric power industry that have the right combination of elements to post an earnings beat this quarter.

Entergy Corporation ETR is expected to report first-quarter 2017 earnings on Apr 26. It has an earnings ESP of +1.89% and a Zacks Rank #3.

NiSource, Inc NI has an earnings ESP of +3.08% and a Zacks Rank #2. It is expected to report first-quarter 2017 earnings on May 3.

Dominion Resources Inc. D has an earnings ESP of +2.15% and a Zacks Rank #3. It is expected to report first-quarter 2017 earnings on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades…from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises.
You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>

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
NiSource, Inc (NI): Free Stock Analysis Report
Entergy Corporation (ETR): Free Stock Analysis Report
FirstEnergy Corporation (FE): Free Stock Analysis Report
Dominion Resources, Inc. (D): Free Stock Analysis Report
To read this article on Zacks.com click here.