Per the latest Earnings Preview, the Zacks Utilities sector’s first-quarter 2024 earnings are expected to be up 4.4% on 1.3% higher revenues. The capital-intensive utility stocks benefited from new electric, natural gas and water rates and proper management of operating costs. Further, customer growth aided the utilities.

With the assistance of the Zacks Stock Screener, we have identified four utilities, namely Eversource Energy (ES Quick QuoteES - Free Report) , Ameren Corporation (AEE Quick QuoteAEE - Free Report) , The AES Corporation (AES Quick QuoteAES - Free Report) and NiSource Inc. (NI Quick QuoteNI - Free Report) , which are poised to beat the Zacks Consensus Estimate this earnings season.

These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

The Utilities sector’s first-quarter earnings started on a positive note, with NextEra Energy reporting an earnings surprise.

Factors at Play

Domestic-focused companies operating in the sector have been concentrating on cost management and the implementation of energy-efficiency programs. New rates and customer additions have been creating fresh demand and assisting the utilities. Investments in strengthening infrastructure are allowing utilities to provide services even during extreme conditions, leading to stable earnings.

Capital-intensive utilities need massive funds to upgrade, maintain and expand their infrastructure and operations. The still high interest rate is, therefore, a concern.

Utilities have been focused on improving productivity and their cost structures by investing in digital technologies, integrating key systems and analyzing data to make proper decisions to improve overall operations. The utilities have been shutting down high-cost old coal fired generation units and installing cost-effective utility-scale clean power units, which is also lowering costs, keeping utility bills affordable for customers.

Improvement in economic conditions in the service territories has created fresh demand for utility services and boosted the revenues and performance of the companies.  The utilities have been actively investing in new technologies to better manage their operation. They are operating higher numbers of storage units to support the usage of renewable energy-based power units.

Expected Outperformers

Eversource Energy is involved in the energy delivery business and generates its revenues from sales to residential, commercial and industrial customers. New electric rates, lower operation and maintenance expenses and a lower effective tax rate are likely to have had a positive impact on first-quarter earnings.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.45, indicating an increase of 2.84% from the year-ago reported figure. Eversource currently has an Earnings ESP of +2.76% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. New electric service rates in Ameren Missouri, new delivery gas rates at Ameren Illinois Natural Gas and lower operation and maintenance expenses are expected to have boosted earnings this time around.

The Zacks Consensus Estimate for first-quarter earnings per share is pegged at $1.09, indicating an increase of 9% from the year-ago reported figure. AEE currently has an Earnings ESP of +0.30% and a Zacks Rank #3.

Ameren Corporation Price and EPS Surprise

Ameren Corporation price-eps-surprise | Ameren Corporation Quote

The AES Corporation provides utility services in the United States and other regions across the globe. In 2024, the company expects to add 3.6 GW of new projects to its portfolio to meet rising demand from its customers. The company’s cost-saving initiatives, proceeds from asset sales as well as favorable contributions from its renewable projects are likely to have boosted earnings amid the adverse impacts of still high interest expenses.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 30 cents, indicating an increase of 36.4% from the year-ago reported figure. AES currently has an Earnings ESP of +6.67% and a Zacks Rank #3.

NiSource, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States.. New natural gas rates implemented in its service territories during the quarter are likely to have boosted earnings.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 81 cents, indicating an increase of 5.2% from the year-ago reported figure. NiSource currently has an Earnings ESP of +1.24% and a Zacks Rank #3.