A handful of S&P 500 stocks from the Utilities sector have reported their Q1 results so far, with all of them recording year-over-year earnings and revenue growth. Impressively, this time the regulated Utilities sector is one among 14 of the total 16 Zacks sectors projected to report year-over-year earnings improvement.
For the first quarter, total earnings of Utility stocks are expected to rise 8% year over year on 6.6% higher revenues. For more details on quarterly releases, you can go through our latest Earnings Outlook.
Factors Likely to Influence Q1 Results
Though reduced commercial and industrial activities as a result of the prolonged lockdown have hampered demand in the Utilities sector over the past few quarters, with gradual reopening of economic activities, albeit at a slow pace, and the rollout of vaccines across the United States, things have started to improve. Although the pandemic still remains an overhang on the economy, the demand scenario has improved in the recent times, further bolstered by increased demand from the residential group due to stay-at-home directives in the wake of the pandemic.
Per data from the U.S. Energy Information Administration (EIA), total electricity retail sales in the month of January increased 3.2% year over year. Such data further validates the enhanced revenue generation capacity posed by utility providers during the first quarter.
Moreover, the nation’s near-zero interest rates have been assisting capital-intensive Utility companies to get funds at low costs to carry on with infrastructure development and add more technically-advanced assets to their portfolio for serving customers efficiently. In fact, such strengthened infrastructure is likely to have offered a cushion to the utilities’ bottom-line performance, which would have otherwise been dampened by severe storm activities..
Utilities Earnings in Focus
Let's take a look at some Utility stocks that are scheduled to report earnings on May 10.
Duke Energy Corporation’s DUK four-quarter average earnings surprise is 0.88%. Mixed weather patterns are expected to have influenced the company’s service territories during the first quarter. This is likely to have had a neutral impact on the utility’s first-quarter revenue performance, which is expected to have boosted the utility’s revenue performance. However, a handful of tropical storms might have pushed up its operating expenses, thereby putting pressure on earnings growth although impressive cost mitigation initiatives might have contributed favorably (read more: Duke Energy to Report Q1 Earnings: What's in the Cards?)
Our proven model predicts an earnings beat for Duke Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has an Earnings ESP of +0.16% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Duke Energy Corporation Price and EPS Surprise
Duke Energy Corporation price-eps-surprise | Duke Energy Corporation Quote
Eversource Energy’s ES four-quarter average earnings surprise is 0.09%. Its first-quarter earnings are likely to have benefited from the inclusion of Eversource Gas Company of Massachusetts in the natural gas segment. Cost-management initiatives undertaken by the company are likely to have boosted margins during the to-be reported quarter.
However, during the quarter, it might have incurred higher operational expenditure owing to major storm activities in its service territories (read more: Eversource Energy to Report Q1 Earnings: What to Expect).
The company has an Earnings ESP of +0.99% and carries a Zacks Rank #4 (Sell).
Eversource Energy Price and EPS Surprise
Eversource Energy price-eps-surprise | Eversource Energy Quote
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