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Utility Stock Q3 Earnings Lineup for Oct 30: PEG, PNW & More

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Aparajita Dutta
·5 min read
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So far, 21.4% of the companies in the Utilities sector have released Q3 numbers, reflecting 11.7% earnings growth from the year-ago quarter despite 1.2% lower revenues.  Notably, the domestic-focused matured Utility sector is one among 14 of the total 16 Zacks sectors projected to report year-over-year earnings decline.

In particular, total Q3 earnings of Utility stocks are expected to decline 1.4% year over year on 2% lower revenues. For more details on quarterly releases, you can go through our latest Earnings Outlook.  

Factors Likely to Influence Q3 Results

Utility companies are expected to have registered a decrease in demand during the third quarter, primarily due to reduced commercial and industrial activities, thanks to the prolonged impacts of the pandemic. However, increased demand from the residential group due to stay-at-home directives might have offset reduced demand to some extent. For instance, per data from the U.S. Energy Information Administration (EIA), revenues from the sale of electricity to the nation’s customers rose 1.9% year over year in July, while it declined 1.9% in August.  Such data are indicative of the reduced revenue generation capacity of utility providers during the third quarter.

Moreover, for major parts of the third quarter, a handful of tropical storms including as deadly as Hurricane Laura ravaged the coastal parts of the United States, followed by flash floods. No doubt such storm activities damaged utility infrastructure, thereby pushing up quarterly costs for utilities operating in the storm-affected regions. This in turn must have weighed on the sector’s bottom line performance that should get reflected in third-quarter results.

Nevertheless, the near-zero level interest rate prevalent in the country has created an opportunity for utilities to make abundant investment in their infrastructural development. Such investment has allowed them to restore services quickly even after getting impacted by an ‘extremely active Atlantic hurricane season in 2020’, per Colorado State University. This, along with rampant cost-cutting initiatives adopted by major utilities, in the wake of the pandemic, might have prevented the sector from incurring huge losses in the third quarter.

Utilities Earnings in Focus

Let's take a look at some Utility stocks that are scheduled to report earnings on Oct 30.

Public Service Enterprise Group’s PEG four-quarter average earnings surprise is 10.07%. Warmer-than-normal temperature prevailing across most parts of the company’s service territories during the third quarter coupled with ongoing capital investment programs in transmission and distribution are expected to have boosted its Q3 revenues. Its service territories suffered a series of tropical storms that  must have pushed up storm restoration costs for the company, thereby weighing on its earnings (read more: What Awaits Public Service Enterprise in Q3 Earnings?).

Our proven model does not conclusively predict an earnings beat for Public Service Enterprise 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. But this is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company has an Earnings ESP of 0.00% and carries a Zacks Rank #3.

Public Service Enterprise Group Incorporated Price and EPS Surprise

Public Service Enterprise Group Incorporated Price and EPS Surprise
Public Service Enterprise Group Incorporated Price and EPS Surprise

Public Service Enterprise Group Incorporated price-eps-surprise | Public Service Enterprise Group Incorporated Quote

Pinnacle West Capital’s PNW four-quarter average earnings surprise is 24.25%. The company’s strategic capital expenditure plans along with its focus on enhancing its renewable capacity are expected to have boosted its performance in the third quarter. Gradual recovery in demand from commercial and industrial group is expected to be reflected in its Q3 results. However, payment flexibility might have hurt the utility's cash balance.

The company has an Earnings ESP of +0.98% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. (read more: Pinnacle West to Post Q3 Earnings: What's in Store?).

Pinnacle West Capital Corporation Price and EPS Surprise

Pinnacle West Capital Corporation Price and EPS Surprise
Pinnacle West Capital Corporation Price and EPS Surprise

Pinnacle West Capital Corporation price-eps-surprise | Pinnacle West Capital Corporation Quote

Fortis Inc. FTS delivered a four-quarter average negative earnings surprise of 1.16%. The company’s third quarter revenue estimate of $1.61 billion indicates an increase of 3.8% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for earnings of 50 cents per share suggests no change from the prior-year quarter reported figure.

Fortis currently has an Earnings ESP of -0.34% and carries a Zacks Rank #3.

Fortis Inc. Price and EPS Surprise

Fortis Inc. Price and EPS Surprise
Fortis Inc. Price and EPS Surprise

Fortis Inc. price-eps-surprise | Fortis Inc. Quote

PNM Resources PNM delivered a four-quarter average earnings surprise of 6.19%. The Zacks Consensus Estimate for the company’s third-quarter earnings of $1.29 per share suggests no change from the prior-year quarter reported figure. Moreover, the estimate rose 9.3% over the past 30 days.

PNM Resources currently has an Earnings ESP of 0.00% and carries a Zacks Rank #2.

PNM Resources, Inc. Holding Co. Price and EPS Surprise

PNM Resources, Inc. Holding Co. Price and EPS Surprise
PNM Resources, Inc. Holding Co. Price and EPS Surprise

PNM Resources, Inc. Holding Co. price-eps-surprise | PNM Resources, Inc. Holding Co. Quote

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Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
 
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