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Utility Stocks' Q3 Earnings to Watch on Nov 1: EIX, CNP, WEC
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Utilities is one of the total 16 Zacks sectors expected to report year-over-year revenue growth in the third quarter of 2022.
So far, a handful of the S&P 500 members from the Zacks Utilities sector have released their Q3 earnings. Another cohort of major utility stocks, including Edison International (EIX - Free Report) , CenterPoint Energy (CNP - Free Report) and WEC Energy (WEC - Free Report) , is set to announce their earnings on Nov 1.
Factors Likely to Influence Q3 Utility Results
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 have been creating fresh demand as well as assisting the utilities.
Investment in strengthening the infrastructure have been 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 regulations related to emissions and the high cost of conventional fuel and government incentives on the usage of clean fuel are also leading 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. The performance of the utilities is likely to have been adversely impacted by the increase in interest rates from 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 the 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 a higher demand for water and electricity for cooling purposes, benefiting the utilities.
Q3 Expectations
Total Q3 earnings of Utility stocks are expected to decline 9.3% year over year, while revenues are likely to improve 3%.
For more details on quarterly releases, you can go through our latest Earnings Preview.
Utilities' Earnings in Focus
Let's take a look at three utility companies that are scheduled to report third-quarter 2022 earnings on Nov 1 and find out how things have shaped up prior to the announcements.
Edison International’s service territories mostly witnessed warmer-than-normal temperatures along with extremely dry weather conditions in the third quarter of 2022, which are likely to have boosted the demand for electricity and, thereby its revenues.
However, Tropical Storm Kay impacted Edison International’s service area with gusty winds and heavy rains, causing mudslides. This might have disrupted the smooth flow of electricity to its customers as well as caused infrastructural damage, thereby dampening the company’s Q3 results (read more: Will Edison International Beat Estimates in Q3 Earnings?).
Edison International has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
CenterPoint Energy’s service territories experienced warmer-than-normal temperature patterns during the July-September 2022 quarter. Such a weather pattern is expected to have boosted electricity demand among the company’s customers for cooling purposes. This in turn must have boosted its top-line performance in the third quarter.
However, tornadoes along with hail storms affected some parts of CenterPoint Energy’s service territories, which may have disrupted this utility’s services in those areas. This is likely to have resulted in outages for its customers, which might have impacted revenues in the to-be-reported quarter.
WEC Energy delivered a four-quarter average earnings surprise of 7.58%. The Zacks Consensus Estimate for the company’s third-quarter earnings, pegged at 86 cents, implies a 6.5% decline from the year-ago quarter’s reported figure.
The consensus mark for the company’s third-quarter revenues, pegged at $1.83 billion, suggests a 5% improvement from the year-ago quarter’s reported figure. WEC Energy has an Earnings ESP of +4.41% and Zacks Rank #4 (Sell).
Image: Bigstock
Utility Stocks' Q3 Earnings to Watch on Nov 1: EIX, CNP, WEC
Utilities is one of the total 16 Zacks sectors expected to report year-over-year revenue growth in the third quarter of 2022.
So far, a handful of the S&P 500 members from the Zacks Utilities sector have released their Q3 earnings. Another cohort of major utility stocks, including Edison International (EIX - Free Report) , CenterPoint Energy (CNP - Free Report) and WEC Energy (WEC - Free Report) , is set to announce their earnings on Nov 1.
Factors Likely to Influence Q3 Utility Results
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 have been creating fresh demand as well as assisting the utilities.
Investment in strengthening the infrastructure have been 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 regulations related to emissions and the high cost of conventional fuel and government incentives on the usage of clean fuel are also leading 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. The performance of the utilities is likely to have been adversely impacted by the increase in interest rates from 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 the 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 a higher demand for water and electricity for cooling purposes, benefiting the utilities.
Q3 Expectations
Total Q3 earnings of Utility stocks are expected to decline 9.3% year over year, while revenues are likely to improve 3%.
For more details on quarterly releases, you can go through our latest Earnings Preview.
Utilities' Earnings in Focus
Let's take a look at three utility companies that are scheduled to report third-quarter 2022 earnings on Nov 1 and find out how things have shaped up prior to the announcements.
Edison International’s service territories mostly witnessed warmer-than-normal temperatures along with extremely dry weather conditions in the third quarter of 2022, which are likely to have boosted the demand for electricity and, thereby its revenues.
However, Tropical Storm Kay impacted Edison International’s service area with gusty winds and heavy rains, causing mudslides. This might have disrupted the smooth flow of electricity to its customers as well as caused infrastructural damage, thereby dampening the company’s Q3 results (read more: Will Edison International Beat Estimates in Q3 Earnings?).
According to the Zacks model, 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Edison International has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Edison International Price and EPS Surprise
Edison International price-eps-surprise | Edison International Quote
CenterPoint Energy’s service territories experienced warmer-than-normal temperature patterns during the July-September 2022 quarter. Such a weather pattern is expected to have boosted electricity demand among the company’s customers for cooling purposes. This in turn must have boosted its top-line performance in the third quarter.
However, tornadoes along with hail storms affected some parts of CenterPoint Energy’s service territories, which may have disrupted this utility’s services in those areas. This is likely to have resulted in outages for its customers, which might have impacted revenues in the to-be-reported quarter.
CenterPoint Energy currently has an Earnings ESP of -1.61% and Zacks Rank #3 (read more: What's in Store for CenterPoint Energy in Q3 Earnings?).
CenterPoint Energy, Inc. Price and EPS Surprise
CenterPoint Energy, Inc. price-eps-surprise | CenterPoint Energy, Inc. Quote
WEC Energy delivered a four-quarter average earnings surprise of 7.58%. The Zacks Consensus Estimate for the company’s third-quarter earnings, pegged at 86 cents, implies a 6.5% decline from the year-ago quarter’s reported figure.
The consensus mark for the company’s third-quarter revenues, pegged at $1.83 billion, suggests a 5% improvement from the year-ago quarter’s reported figure. WEC Energy has an Earnings ESP of +4.41% and Zacks Rank #4 (Sell).
WEC Energy Group, Inc. Price and EPS Surprise
WEC Energy Group, Inc. price-eps-surprise | WEC Energy Group, Inc. Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.