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Edison International (EIX) Q1 Earnings: What's in Store?

Zacks Equity Research

Electric utility provider Edison International EIX is scheduled to report first-quarter 2017 earnings results on May 1 after market close.

Last quarter, the company recorded a positive earnings surprise of 5.21%. However, the company surpassed the Zacks Consensus Estimate in only one of the trailing four quarters, with average negative surprise of 5.18%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

Edison International’s chief unit, Southern California Edison (“SCE”), operates in a supportive regulatory environment that allows the utility to grow systematically. The company is also implementing infrastructure improvement programs like SmartConnect and Solar Photovoltaic Program that focus mainly on system reliability, smart grid technology and compliance with California's renewable energy mandate. We expect gains from these initiatives to reflect in the first-quarter’s results.

However, the company's service territories witnessed warmer-than-normal temperatures during the quarter. This will result in lower household expenditure on heating, which is expected to unfavorably impact revenues.

Moreover, Edison International’s operations are subject to complex federal, state and local legislative requirements as well as extensive environmental regulations. The company generates more than 80% of its revenues from regulated utility assets. Hence, its earnings are dependent on approvals from regulatory bodies and any adverse ruling could impact its performance.

Overall, for the first quarter, the Zacks Consensus Estimate for earnings reflect a year-over-year increase of 5.12%, while that for revenues the same is pegged at $2.50 billion, thereby reflecting 2.38% growth.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Edison International this quarter. This 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. That is not the case here, as elaborated below.

Zacks ESP: Edison International has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 86 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Edison International currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Edison International Price and EPS Surprise

 

Edison International Price and EPS Surprise | Edison International Quote

Stocks that Warrant a Look

Here are a few utility stocks which have the right combination of elements to post an earnings beat this quarter:

NiSource, Inc. NI will report first-quarter results on May 3. The company has an Earnings ESP of +3.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy Group, Inc. PEGI has an Earnings ESP of +300% and a Zacks Rank #3. The company is expected to report first-quarter results on May 8.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +7.14% and a Zacks Rank #3. The company is slated to release first-quarter results on May 2.

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Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
 
NiSource, Inc (NI): Free Stock Analysis Report
 
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Pattern Energy Group Inc. (PEGI): Free Stock Analysis Report
 
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