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Utility Stocks' Q2 Earnings Due on Jul 28: XEL, PCG, EIX & 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 its stable earnings.

Utilities are gradually moving toward clean sources of fuel to produce electricity and lower emission. The stringent regulation of emissions and the high cost of conventional fuel and government incentive on the usage of clean fuel are also urging the utilities to take a decision and focus more on clean energy sources. Many utilities have already pledged to provide 100% electricity from clean sources in the next few decades.

The performance of the capital-intensive 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 will further hike capital servicing expenses and adversely impact earnings.

Per the updated outlook of National Oceanic and Atmospheric Administration, the summer of 2022 is expected to be drier and hotter than normal temperatures. This would undoubtedly lead to higher demand for water and electricity for cooling purposes, benefiting the utilities.

Per the latest Earnings Trends report, the utility sector’s second-quarter earnings are expected to decline 6.6%, while revenues are estimated to improve 0.5%.

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.

Xcel Energy Inc.’s XEL second-quarter earnings are likely to have benefited from an interim rate increase for electric and natural gas customers and an expanding customer base. However, the expected increase in operating expenses can act as a headwind. (Read more: Xcel Energy to Report Q2 Earnings: What's in the Offing? )

Our proven model predicts an earnings beat for Xcel Energy this time around. XEL has an Earnings ESP of +0.84% and a Zacks Rank of 3.

Xcel Energy Inc. Price and EPS Surprise

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

PG&E Corporation’s PCG second-quarter earnings are likely to have benefited from warmer-than-normal temperatures in its service territories, which boosted demand for utility services. (Read more: PG&E Set to Report Q2 Earnings: What's in Store?)

Our proven model predicts an earnings beat for PG&E Corporation this time around. PCG has an Earnings ESP of +1.70% and a Zacks Rank of 3.

Pacific Gas & Electric Co. Price and EPS Surprise

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

DTE Energy Company’s DTE ) second-quarter earnings are likely to have benefited from warmer-than-normal temperature in its service territories, but restoration expenses and increased operating and maintenance expenses are likely to have dented the bottom line. (Read more: What's in the Offing for DTE Energy in Q2 Earnings?)

Our proven model predicts an earnings beat for DTE Energy this time around. DTE has an Earnings ESP of +3.41% and a Zacks Rank of 3.

DTE Energy Company Price and EPS Surprise

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

CMS Energy Corporation’s CMS second-quarter earnings are likely to have gained from improving sales volume from its industrial and commercial customers. However, severe weather conditions in some service areas damaged infrastructure and restoration expenses are likely to have increased operating expenses. ( Read more: What's in the Offing for CMS Energy  in Q2 Earnings?)

Our proven model does not conclusively predict an earnings beat for CMS Energy this time around. CMS has an Earnings ESP of -1.32% and a Zacks Rank of 3.

CMS Energy Corporation Price and EPS Surprise

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

Edison International’s EIX second-quarter earnings are likely to have gained from warmer-than-normal temperatures that boosted demand for electricity. The implementation of new rates is also expected to have contributed to earnings.  However, an increase in restoration and repair expenses could have offset the positives. (Read more: What's in Store for Edison International in Q2 Earnings?)

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

Edison International Price and EPS Surprise

Edison International price-eps-surprise | Edison International 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
 
Edison International (EIX): Free Stock Analysis Report
 
Pacific Gas & Electric Co. (PCG): Free Stock Analysis Report
 
DTE Energy Company (DTE): Free Stock Analysis Report
 
CMS Energy Corporation (CMS): Free Stock Analysis Report
 
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