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What's in Store for Edison International (EIX) Q2 Earnings?

Zacks Equity Research

Edison International EIX is set to release second-quarter 2019 results on July 25, after the market closes.

In the last reported quarter, the company witnessed a negative earnings surprise of 28.41%. Moreover, it surpassed the Zacks Consensus Estimate in only two of the trailing four quarters, the average miss being 3.22%.

Let’s see how things are shaping up prior to this announcement.

Factors Under Consideration

During the second quarter, major parts of California experienced above average and above normal temperatures, highlighted by significantly warm weather conditions. This, in turn, should result in higher household expenditure on cooling, which could further favorably impact the company’s revenues in the upcoming quarterly results.

In line with this, the Zacks Consensus Estimate for second-quarter revenues of $3.15 billion indicates a rise of 12% from the year-ago reported figure.

In the bottom-line context, Edison International has been witnessing lower expenses on income tax and improved corporate expenses over the last couple of quarters. We expect similar trends to follow in the soon-to-be-reported quarter, which are likely to boost the company’s earnings in the process. In line with this, the Zacks Consensus Estimate for second-quarter bottom line is pegged at $1.13, suggesting a 34.5% surge from the year-earlier reported number.

However, management projects higher operating and interest expenses to mar the company’s bottom-line prospects for the Parent and Other unit. Notably, the upcoming investors’ call might highlight these headwinds.

Earnings Whispers

Our proven model does not conclusively show that Edison International 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. But that is not the case here as elaborated below.

Earnings ESP: Edison International has an Earnings ESP of -1.94%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Edison International carries a Zacks Rank #3, which increases the predictive power of ESP. However, a negative ESP in the combination leaves surprise prediction inconclusive for the stock this reporting cycle.

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.

Edison International Price and EPS Surprise

Edison International Price and EPS Surprise

Edison International price-eps-surprise | Edison International Quote

Stocks to Consider

Here are a few players from the Utilities sector that have the right combination of elements to beat on earnings this time around.

Entergy Corporation ETR has an Earnings ESP of +1.4% and a Zacks Rank #2. The company is expected to release second-quarter 2019 results
on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Southern Company SO has an Earnings ESP of +0.46% and a Zacks Rank of 3. The company is expected to release second-quarter 2019 results on Jul 31.

NextEra Energy, Inc. NEE has an Earnings ESP of +1.41% and is a Zacks #3 Ranked player. The company is scheduled to release second- quarter results on Jul 24.

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