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Utility Stock Q3 Earnings Due on Oct 27: SO, XEL, AEP & More

The Zacks Utilities sector is expected to have benefited from a revival of demand in the commercial and industrial groups of customers. An improvement in economic conditions after the pandemic has been generating fresh demand for utility services.

Domestic-focused companies operating in the sector are focused on cost management and implementation of energy-efficiency programs. New rates and customer additions are creating fresh demand as well as assisting the utilities.

Investment in strengthening the infrastructure is allowing the utilities to provide services even during extreme conditions, leading to stable earnings. Domestic-focused operations also insulate the utilities from the adverse impact of currency fluctuation.

A clear transition is evident in the Utilities space, with companies operating in this space gradually moving toward clean sources of fuel to produce electricity and lower emission. The stringent regulation of emissions, the high cost of conventional fuel and government incentives on the usage of clean fuel are also urging the utilities to focus more on clean energy sources. Many utilities have already pledged to provide 100% electricity from clean sources in the next few decades.

Utilities need massive funds to upgrade, maintain and expand their infrastructure and operations, and are capital-intensive in nature. The performance of the utilities is likely to have been adversely impacted by the increase in interest rates from the near-zero levels. The increase in borrowing costs and the possibility of more interest rate hikes this year may have further pushed up capital servicing expenses and adversely impacted earnings.

Per the updated outlook of National Oceanic and Atmospheric Administration, the July-September 2022 average contiguous U.S. temperature was 73.0°F, 2.8°F above average. The above-average temperature during the summer months is likely to have created higher demand for water and electricity for cooling purposes, benefiting the utilities.

Per the latest Earnings Trends report, the utility sector’s third-quarter earnings are expected to decline 9.3%, while revenues are estimated to improve 1.8%.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Southern Company’s SO third-quarter earnings are likely to have benefited from customer additions and economic development in its service territories resulting in fresh demand for its services. However, the expected increase in operating expenses can act as a headwind. (Read more: Will Southern Continue Its Earnings Beat Streak in Q3?)

Our proven model predicts a likely earnings beat for Southern Company this time around. SO has an Earnings ESP of +0.38% and a Zacks Rank of 3.

 

Southern Company The Price and EPS Surprise

Southern Company The Price and EPS Surprise
Southern Company The Price and EPS Surprise

Southern Company The price-eps-surprise | Southern Company The Quote

Xcel Energy Inc.’s XEL third-quarter earnings are likely to have benefited from the rate increases implemented during the first nine months and higher demand from an expanding customer base. However, the expected increase in operating expenses may have acted as a headwind. (Read more: Xcel Energy to Report Q3 Earnings: What's in Store? )

Our proven model does not conclusively predict an earnings beat for Xcel Energy this time around. XEL has an Earnings ESP of 0.00% and a Zacks Rank of 3.

Xcel Energy Inc. Price and EPS Surprise

Xcel Energy Inc. Price and EPS Surprise
Xcel Energy Inc. Price and EPS Surprise

Xcel Energy Inc. price-eps-surprise | Xcel Energy Inc. Quote

American Electric Power Company’s AEP third-quarter earnings are likely to have benefited from its cost-saving initiatives and improved demand from customers. Severe weather conditions in some regions of its service territories are likely to have adversely impacted performance and increased operating expenses. ( Read more: What's in Store for American Electric in Q3 Earnings?)

Our proven model does not conclusively predict an earnings beat for American Electric Power this time around. AEP has an Earnings ESP of 0.00% and a Zacks Rank of 2.

American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. Price and EPS Surprise
American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. price-eps-surprise | American Electric Power Company, Inc. Quote


DTE Energy Company’s DTE third-quarter earnings are likely to have benefited from warmer-than-normal temperatures in its service territories, which boosted demand. Higher costs and an increase in operating expenses are likely to have offset the positives. ( Read more: What's in the Cards for DTE Energy in Q3 Earnings?)

Our proven model does not predicts an earnings beat for DTE Energy this time around. DTE has an Earnings ESP of 0.00% and a Zacks Rank of 3.

DTE Energy Company Price and EPS Surprise

DTE Energy Company Price and EPS Surprise
DTE Energy Company Price and EPS Surprise

DTE Energy Company price-eps-surprise | DTE Energy Company Quote

PG&E Corporation’s PCG third-quarter earnings are likely to have benefited from favorable weather in its service territories, while extreme dry conditions resulting in some wildfire activities may have adversely impacted operations. ( Read more: PG&E Set to Report Q3 Earnings: What's in the Cards?)

Our proven model does not conclusively predict an earnings beat for PG&E Corporation this time around.  PCG has an Earnings ESP of -4.17% and a Zacks Rank of 2.

Pacific Gas & Electric Co. Price and EPS Surprise

Pacific Gas & Electric Co. Price and EPS Surprise
Pacific Gas & Electric Co. Price and EPS Surprise

Pacific Gas & Electric Co. price-eps-surprise | Pacific Gas & Electric Co. Quote


CMS Energy Corporation’s CMS third-quarter earnings are likely to have benefited from an improvement in demand from industrial and commercial customer group, while cost-management initiatives are expected to have contributed to the bottom line.  (Read more: What's in the Offing for CMS Energy in Q3 Earnings?)

Our proven model does not conclusively predict an earnings beat for CMS Energy this time around. CMS has an Earnings ESP of 0.00% and a Zacks Rank of 3.

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation Price and EPS Surprise
CMS Energy Corporation Price and EPS Surprise

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

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Xcel Energy Inc. (XEL) : Free Stock Analysis Report
 
Southern Company The (SO) : Free Stock Analysis Report
 
Pacific Gas & Electric Co. (PCG) : Free Stock Analysis Report
 
DTE Energy Company (DTE) : Free Stock Analysis Report
 
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
 
CMS Energy Corporation (CMS) : Free Stock Analysis Report
 
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