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What's in Store for These 4 Utilities This Earnings Season?
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The Zacks Utilities sector’s second-quarter 2024 earnings are expected to have been driven by planned investments to further improve operations, cost-saving initiatives, new electric and gas rates and usage of new technologies that helped in increasing the reliability of services.
Per the latest Earnings Preview, the Zacks Utilities sector’s second-quarter earnings are expected to have increased 6% year over year on a 2.5% increase in revenues. The utilities have been focused on strengthening their infrastructure and providing high-quality services to their customers even during adverse weather conditions.
A few companies like CMS Energy Corporation (CMS - Free Report) , Edison International (EIX - Free Report) DTE Energy (DTE - Free Report) and PG&E Corporation(PCG - Free Report) are set to report second-quarter earnings on Jul 25. These announcements will provide an insight on how things have shaped up for utilities this earnings season.
Factors to Consider
Utilities continue to make prudent capital expenditures that reduce operating, fuel, and maintenance expenses. As a result, customers benefit from saving money on their utility costs. Utilities have reduced costs while simultaneously improving overall operations and efficiency through digital technology investments, crucial system connections and data-driven decision-making.
Various positive aspects, such as new electric and natural gas tariffs, customer additions, cost control and the execution of energy-efficiency initiatives, continue to benefit utilities. Also, the ongoing investments to further improve the resiliency of electric infrastructure against extreme weather conditions and the transition to cost-effective, renewable energy sources to produce electricity are expected to have benefited the power industry. Utilities have been building large battery storage units to support renewable energy projects, which will allow them to provide electricity to customers even during non-productive hours.
Most of the utility companies have pledged to deliver 100% clean energy and achieve the zero-emission target in the coming years. As a result, these companies have been reducing their use of coal and other polluting sources in their generating portfolios and increasing the use of clean, renewable energy sources in their production portfolios. Coal-powered production units are gradually becoming idle and are used as a backup for renewable energy projects.
A high interest rate environment prevailed in the United States during the second quarter. However, the Fed has not increased the benchmark rate since July 2023, which is a positive for capital-intensive utility operators as it did not increase the cost of projects further.
Second-quarter weather patterns were warmer than normal for most of the second quarter across most parts of the United States. Warmer-than-normal weather is expected to have positively impacted utilities' second-quarter performance.
What Our Model Predicts
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 beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
CMS Energy Corporation's quarterly results are likely to benefit from its ongoing cost savings initiatives and improving economic condition in Michigan, which are creating demand for utility services from all customer groups. New electric rates approved in March are also likely to have positively impacted second-quarter performance. (Read more: CMS Energy to Post Q2 Earnings: What to Expect)
Edison International’s second-quarter results are likely to benefit from its revenue decoupling mechanism. The company has also been benefiting from contributions coming from its energy storage units and increasing demand from EVs. The company’s upgraded transmission lines ensure a continuous flow of electricity to customers, thus boosting revenues of the company.
Our proven model predicts an earnings beat for Edison International this time around. EIX has an Earnings ESP of +0.66% and a Zacks Rank #2 at present.
DTE Energy’s second-quarter results are likely to benefit from its ongoing customer-focused capital investment plan is supported by consistent, healthy cash flows. Warmer-than-normal weather in its service territories is likely to have boosted demand and benefited earnings in the quarter.
Our proven model does not conclusively predict an earnings beat for DTE Energy this time around. DTE has an Earnings ESP of +2.81% and a Zacks Rank #4 (Sell) at present.
PG&E Corporation's second-quarter earnings are likely to have benefited from its efforts to reduce its non-fuel operation and maintenance) expenses. The company is expected to have gained from rising demand from EVs and data centers.
Our proven model does not conclusively predict an earnings beat for the company this time around. PCG has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
Image: Bigstock
What's in Store for These 4 Utilities This Earnings Season?
The Zacks Utilities sector’s second-quarter 2024 earnings are expected to have been driven by planned investments to further improve operations, cost-saving initiatives, new electric and gas rates and usage of new technologies that helped in increasing the reliability of services.
Per the latest Earnings Preview, the Zacks Utilities sector’s second-quarter earnings are expected to have increased 6% year over year on a 2.5% increase in revenues. The utilities have been focused on strengthening their infrastructure and providing high-quality services to their customers even during adverse weather conditions.
A few companies like CMS Energy Corporation (CMS - Free Report) , Edison International (EIX - Free Report) DTE Energy (DTE - Free Report) and PG&E Corporation(PCG - Free Report) are set to report second-quarter earnings on Jul 25. These announcements will provide an insight on how things have shaped up for utilities this earnings season.
Factors to Consider
Utilities continue to make prudent capital expenditures that reduce operating, fuel, and maintenance expenses. As a result, customers benefit from saving money on their utility costs. Utilities have reduced costs while simultaneously improving overall operations and efficiency through digital technology investments, crucial system connections and data-driven decision-making.
Various positive aspects, such as new electric and natural gas tariffs, customer additions, cost control and the execution of energy-efficiency initiatives, continue to benefit utilities. Also, the ongoing investments to further improve the resiliency of electric infrastructure against extreme weather conditions and the transition to cost-effective, renewable energy sources to produce electricity are expected to have benefited the power industry. Utilities have been building large battery storage units to support renewable energy projects, which will allow them to provide electricity to customers even during non-productive hours.
Most of the utility companies have pledged to deliver 100% clean energy and achieve the zero-emission target in the coming years. As a result, these companies have been reducing their use of coal and other polluting sources in their generating portfolios and increasing the use of clean, renewable energy sources in their production portfolios. Coal-powered production units are gradually becoming idle and are used as a backup for renewable energy projects.
A high interest rate environment prevailed in the United States during the second quarter. However, the Fed has not increased the benchmark rate since July 2023, which is a positive for capital-intensive utility operators as it did not increase the cost of projects further.
Second-quarter weather patterns were warmer than normal for most of the second quarter across most parts of the United States. Warmer-than-normal weather is expected to have positively impacted utilities' second-quarter performance.
What Our Model Predicts
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 beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
CMS Energy Corporation's quarterly results are likely to benefit from its ongoing cost savings initiatives and improving economic condition in Michigan, which are creating demand for utility services from all customer groups. New electric rates approved in March are also likely to have positively impacted second-quarter performance. (Read more: CMS Energy to Post Q2 Earnings: What to Expect)
Our proven model predicts an earnings beat for CMS Energy this time around. CMS has an Earnings ESP of +0.39% and a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CMS Energy Corporation Price and EPS Surprise
CMS Energy Corporation price-eps-surprise | CMS Energy Corporation Quote
Edison International’s second-quarter results are likely to benefit from its revenue decoupling mechanism. The company has also been benefiting from contributions coming from its energy storage units and increasing demand from EVs. The company’s upgraded transmission lines ensure a continuous flow of electricity to customers, thus boosting revenues of the company.
Our proven model predicts an earnings beat for Edison International this time around. EIX has an Earnings ESP of +0.66% and a Zacks Rank #2 at present.
Edison International Price and EPS Surprise
Edison International price-eps-surprise | Edison International Quote
DTE Energy’s second-quarter results are likely to benefit from its ongoing customer-focused capital investment plan is supported by consistent, healthy cash flows. Warmer-than-normal weather in its service territories is likely to have boosted demand and benefited earnings in the quarter.
Our proven model does not conclusively predict an earnings beat for DTE Energy this time around. DTE has an Earnings ESP of +2.81% and a Zacks Rank #4 (Sell) at present.
DTE Energy Company Price and EPS Surprise
DTE Energy Company price-eps-surprise | DTE Energy Company Quote
PG&E Corporation's second-quarter earnings are likely to have benefited from its efforts to reduce its non-fuel operation and maintenance) expenses. The company is expected to have gained from rising demand from EVs and data centers.
Our proven model does not conclusively predict an earnings beat for the company this time around. PCG has an Earnings ESP of 0.00% and a Zacks Rank #3 at present.
Pacific Gas & Electric Co. Price and EPS Surprise
Pacific Gas & Electric Co. price-eps-surprise | Pacific Gas & Electric Co. Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.