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Factors Likely to Shape Duke Energy's (DUK) Earnings in Q2

Zacks Equity Research

Duke Energy Corporation DUK is set to report second-quarter 2019 results on Aug 6, before the opening bell.
 
In the last reported quarter, the company delivered a positive earnings surprise of 2.48%. However, the bottom line missed the Zacks Consensus Estimate in two of the last four quarters, the average miss being 1.25%.
 
Let’s see how things are shaping up prior to this announcement.
 
Factors Under Consideration
 
Duke Energy’s service territories witnessed above-average warm temperatures during most of the second quarter, with Florida and Carolina ranking warmest on record for the month of May. This is expected to boost demand for electricity by the utility’s customers on account of increased usage of cooling applications.

However, the smooth supply of power by Duke Energy might have been disrupted due to above-average rainfalls that caused flash flooding and some tornadoes in the second quarter. This might have marred the company’s top line in the to-be-reported quarter.
 
Currently, the Zacks Consensus Estimate for second-quarter revenues is pegged at $5.69 billion, indicating a 0.8% rise from the figure reported in the year-ago quarter.

Duke Energy Corporation Price and EPS Surprise

Duke Energy Corporation Price and EPS Surprise

Duke Energy Corporation price-eps-surprise | Duke Energy Corporation Quote

On the flip side, the company continues to anticipate incurring higher costs due to delay in the Atlantic Coast Pipeline project. This may have an unfavorable impact on Duke Energy’s bottom line in the second quarter. However, the recent base rate increases in Florida and North Carolina can be expected to offset this headwind and keep the company’s earnings buoyant.

For quarterly earnings, the Zacks Consensus Estimate is pinned at 98 cents, suggesting 5.38% growth from the year-earlier quarter’s reported figure.

Moreover, in April, Duke Energy received an order from the North Carolina Department of Environmental Quality (NCDEQ) requiring excavation of coal ash basins at some of the company’s facilities. Following this dictate, the company expects the fullest excavation to cost an incremental $4-$5 billion versus the capital expenditure it earlier projected. We may expect more updates on this matter after Duke Energy releases its second-quarter results.

Earnings Whisper

Our proven model does not show that Duke Energy is likely to beat estimates in the second 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. This is not the case here, as you will see below.

Earnings ESP: Duke Energy has an Earnings ESP of -1.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some players from the Utilities sector that have the right combination of elements to beat estimates this time around.

Black Hills Corporation BKH has an Earnings ESP of +0.75% and a Zacks Rank #3. The company is scheduled to report second-quarter 2019 results on Aug 5.

PPL Corporation PPL has an Earnings ESP of +1.18% and a Zacks Rank #3. The company is set to release second-quarter 2019 results on Aug 6.

Recent Release

DTE Energy Company DTE reported second-quarter 2019 operating earnings per share (EPS) of 99 cents, which missed the Zacks Consensus Estimate of $1.09 by 9.2%. The bottom line also declined 27.2% from $1.36 registered in the year-ago quarter.

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Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
PPL Corporation (PPL) : Free Stock Analysis Report
 
Black Hills Corporation (BKH) : Free Stock Analysis Report
 
DTE Energy Company (DTE) : Free Stock Analysis Report
 
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