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What's in the Cards for DTE Energy's (DTE) Q4 Earnings?

Zacks Equity Research

DTE Energy Corporation DTE is set to report fourth-quarter and 2018 financial results on Feb 7, before the market opens. Last reported quarter, the company delivered earnings surprise of 22.41%.

In the trailing four quarters, the company came up with average positive earnings surprise of 12.11%.

Let's take a closer look at the factors influencing DTE Energy’s quarterly results.

Factors to Consider

DTE Energy’s service territories witnessed one of the wettest winters in the fourth quarter, which subsequently will result in lower household expenditure on heating. This, in turn, may have adversely impacted the company’s revenues in the upcoming results.

Moreover, the company made an announcement last year regarding the reduction of its gas rates to reflect the U.S. tax reforms, starting from July 2018. Although this strategy is likely to aid DTE Energy in the long run, such reduction may lead to low gas bills for its customers in the fourth quarter. This, in turn, can weigh on DTE Energy’s gas revenues, thereby impacting its total revenues in the to-be-reported quarter. In line with this, the Zacks Consensus Estimate for DTE Energy’s fourth-quarter revenues is pegged at $2,349 million, reflecting year-over-year plunge of 28.2%.

Such low revenue expectations are expected to hamper the company’s bottom-line results as well. Meanwhile, absence of tax benefits, courtesy of
the latest U.S. Tax Cuts & Jobs Act, lowered DTE Energy’s earnings in the third quarter of 2018. Moreover, the tax equity transactions for the company’s Reduced Emissions Fuel (REF) business is expected to lower its earnings. Considering these factors, the consensus mark for the company’s fourth-quarter earnings pegged at 92 cents per share represents a year-over-year decline of 27%.

Earnings Whispers

Our proven model does not conclusively show that DTE Energy is likely to beat on earnings 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. This is not the case here, as you will see below.

Earnings ESP: DTE Energy has an Earnings ESP of -1.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: DTE Energy currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.

DTE Energy Company Price and EPS Surprise


DTE Energy Company Price and EPS Surprise | DTE Energy Company Quote

Stocks to Consider

Here are a few other players from the Utilities sector that have the right combination of elements to post an earnings beat this quarter.

Ameren Corp. AEE has an Earnings ESP of +1.68% and a Zacks Rank #1. The company is scheduled to report fourth-quarter results on Feb 14.

Allete Inc. ALE has an Earnings ESP of +5.26% and a Zacks Rank #2. The company is scheduled to release fourth-quarter results on Feb 14.

Portland General Electric Company POR has an Earnings ESP of +4.19% and a Zacks Rank #1. The company is scheduled to release fourth-quarter results on Feb 15.

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