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What to Expect From These 5 Utility Stocks in Q2 Earnings?
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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 its operations, energy efficiency programs, cost-saving initiatives and usage of new technologies that helped in increasing the reliability of its services and lowering operating and maintenance expenses.
Per the latest Earnings Preview, the Zacks Utilities sector’s second-quarter earnings are expected to have increased 9.1% year over year on revenue growth of 1.1%. The utilities might have benefited from their continuous initiatives to enhance infrastructure to provide reliable services under extreme weather conditions. New utility rates implemented in the service territories and customer growth are also likely to have boosted profits.
Factors at Play
Utilities continue to make prudent capital expenditures that reduce operating, fuel, maintenance and upkeep expenses. As a result, customers benefit from saving money on their utility costs. Utilities have reduced costs while improving overall operations and efficiency through digital technology investments, crucial system connections and data-driven decision-making. They continue to gain from a number of positive factors, including new electric tariffs, customer additions, cost control and the implementation of energy-efficiency efforts.
The power sector is also anticipated to have gained from the continuous expenditures made to strengthen the electric infrastructure's resistance to extreme weather conditions and the switch to more affordable, renewable energy sources for electricity production.
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. In order to promote renewable energy projects, utilities have begun constructing large battery storage units. This should enable them to supply electricity to consumers even during non-productive hours.
For most of the second quarter, the weather remained warmer than normal across the utilities’ service territories, accompanied with precipitation ranging from below average to above normal. Such a weather condition is expected to have positively impacted the utilities' top-line performance.
Still-high interest rate environment that remained in the United States during the quarter is likely to have caused higher borrowing expenses for the capital-intensive utilities. As a result, increased interest expenses might have had a negative impact on the sector's profitability.
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.
Xcel Energy’s (XEL - Free Report) second-quarter earnings are likely to have benefited from higher demand from data centers and the company’s proactive measures to save its systems and customers from extreme weather conditions. The interim electric and natural gas rate approval in the first half of the year is anticipated to have positively impacted earnings. (Read more: Xcel Energy to Report Q2 Earnings: What's in Store?)
Entergy Corporation’s (ETR - Free Report) service territories experienced above-normal temperature patterns for the majority of the second quarter. This is likely to have boosted electricity demand from its customers for cooling purposes, which might have contributed favorably to its quarterly revenues. However, some parts of its service areas witnessed severe rain, hailstorms and tornadoes, which are anticipated to have caused outages for some of ETR’s customers. This is expected to have adversely impacted its overall top-line performance. (Read more: Entergy to Report Q2 Earnings: What's in the Cards?)
Our proven model predicts an earnings beat for Entergy this time around. ETR has an Earnings ESP of +2.42% and a Zacks Rank #3 at present.
Dominion Energy Inc.’s (D - Free Report) second-quarter earnings are likely to have benefited from regulated investments and higher sales volumes. Economic development and population growth in Virginia and South Carolina are likely to have boosted earnings. The lack of Millstone Power plant outages compared with the year-ago quarter is also likely to have had a positive impact on earnings. (Read more: Dominion Energy to Post Q2 Earnings: What to Expect)
Our proven model predicts an earnings beat for Dominion Energy this time around. D has an Earnings ESP of +1.72% and a Zacks Rank #3 at present.
Pinnacle West Capital Corporation’s (PNW - Free Report) Arizona Public Service (“APS”) went live with a new Energy Management System (“EMS”). EMS is expected to provide a better foundation, which will improve future integration of the renewable and energy storage assets into APS’ generation resource portfolio. Revenues are expected to have benefited from retail customer growth and an increase in electricity sales, owing to strong growth in the Arizona region. However, higher depreciation, amortization and property taxes must have offset some positives in the to-be-reported quarter. (Read more: What's in Store for Pinnacle West Capital in Q2 Earnings?)
Our proven model does not predict an earnings beat for Pinnacle West Capital this time around. PNW has an Earnings ESP of -0.63% and a Zacks Rank #4 (Sell) at present.
Pinnacle West Capital Corporation Price and EPS Surprise
Consolidated Edison, Inc.’s (ED - Free Report) service territories witnessed a warmer-than-normal temperature pattern during most of the April-June 2024 quarter. This is expected to have boosted electricity demand among the company’s customers, thereby positively contributing to its second-quarter top-line performance. Moreover, strong rate-based growth in the prior quarters might have added an impetus to ED’s second-quarter revenues. (Read more: Consolidated Edison to Post Q2 Earnings: What's in Store?)
Our proven model does not predict an earnings beat for Consolidated Edison this time around. ED has an Earnings ESP of -2.28% and a Zacks Rank #3 at present.
Image: Bigstock
What to Expect From These 5 Utility Stocks in Q2 Earnings?
The Zacks Utilities sector’s second-quarter 2024 earnings are expected to have been driven by planned investments to further improve its operations, energy efficiency programs, cost-saving initiatives and usage of new technologies that helped in increasing the reliability of its services and lowering operating and maintenance expenses.
Per the latest Earnings Preview, the Zacks Utilities sector’s second-quarter earnings are expected to have increased 9.1% year over year on revenue growth of 1.1%. The utilities might have benefited from their continuous initiatives to enhance infrastructure to provide reliable services under extreme weather conditions. New utility rates implemented in the service territories and customer growth are also likely to have boosted profits.
Factors at Play
Utilities continue to make prudent capital expenditures that reduce operating, fuel, maintenance and upkeep expenses. As a result, customers benefit from saving money on their utility costs. Utilities have reduced costs while improving overall operations and efficiency through digital technology investments, crucial system connections and data-driven decision-making. They continue to gain from a number of positive factors, including new electric tariffs, customer additions, cost control and the implementation of energy-efficiency efforts.
The power sector is also anticipated to have gained from the continuous expenditures made to strengthen the electric infrastructure's resistance to extreme weather conditions and the switch to more affordable, renewable energy sources for electricity production.
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. In order to promote renewable energy projects, utilities have begun constructing large battery storage units. This should enable them to supply electricity to consumers even during non-productive hours.
For most of the second quarter, the weather remained warmer than normal across the utilities’ service territories, accompanied with precipitation ranging from below average to above normal. Such a weather condition is expected to have positively impacted the utilities' top-line performance.
Still-high interest rate environment that remained in the United States during the quarter is likely to have caused higher borrowing expenses for the capital-intensive utilities. As a result, increased interest expenses might have had a negative impact on the sector's profitability.
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.
Xcel Energy’s (XEL - Free Report) second-quarter earnings are likely to have benefited from higher demand from data centers and the company’s proactive measures to save its systems and customers from extreme weather conditions. The interim electric and natural gas rate approval in the first half of the year is anticipated to have positively impacted earnings. (Read more: Xcel Energy to Report Q2 Earnings: What's in Store?)
Our proven model predicts an earnings beat for Xcel Energy this time around. XEL has an Earnings ESP of +3.48% and a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Xcel Energy Inc. Price and EPS Surprise
Xcel Energy Inc. price-eps-surprise | Xcel Energy Inc. Quote
Entergy Corporation’s (ETR - Free Report) service territories experienced above-normal temperature patterns for the majority of the second quarter. This is likely to have boosted electricity demand from its customers for cooling purposes, which might have contributed favorably to its quarterly revenues. However, some parts of its service areas witnessed severe rain, hailstorms and tornadoes, which are anticipated to have caused outages for some of ETR’s customers. This is expected to have adversely impacted its overall top-line performance. (Read more: Entergy to Report Q2 Earnings: What's in the Cards?)
Our proven model predicts an earnings beat for Entergy this time around. ETR has an Earnings ESP of +2.42% and a Zacks Rank #3 at present.
Entergy Corporation Price and EPS Surprise
Entergy Corporation price-eps-surprise | Entergy Corporation Quote
Dominion Energy Inc.’s (D - Free Report) second-quarter earnings are likely to have benefited from regulated investments and higher sales volumes. Economic development and population growth in Virginia and South Carolina are likely to have boosted earnings. The lack of Millstone Power plant outages compared with the year-ago quarter is also likely to have had a positive impact on earnings. (Read more: Dominion Energy to Post Q2 Earnings: What to Expect)
Our proven model predicts an earnings beat for Dominion Energy this time around. D has an Earnings ESP of +1.72% and a Zacks Rank #3 at present.
Dominion Energy Inc. Price and EPS Surprise
Dominion Energy Inc. price-eps-surprise | Dominion Energy Inc. Quote
Pinnacle West Capital Corporation’s (PNW - Free Report) Arizona Public Service (“APS”) went live with a new Energy Management System (“EMS”). EMS is expected to provide a better foundation, which will improve future integration of the renewable and energy storage assets into APS’ generation resource portfolio. Revenues are expected to have benefited from retail customer growth and an increase in electricity sales, owing to strong growth in the Arizona region. However, higher depreciation, amortization and property taxes must have offset some positives in the to-be-reported quarter. (Read more: What's in Store for Pinnacle West Capital in Q2 Earnings?)
Our proven model does not predict an earnings beat for Pinnacle West Capital this time around. PNW has an Earnings ESP of -0.63% and a Zacks Rank #4 (Sell) at present.
Pinnacle West Capital Corporation Price and EPS Surprise
Pinnacle West Capital Corporation price-eps-surprise | Pinnacle West Capital Corporation Quote
Consolidated Edison, Inc.’s (ED - Free Report) service territories witnessed a warmer-than-normal temperature pattern during most of the April-June 2024 quarter. This is expected to have boosted electricity demand among the company’s customers, thereby positively contributing to its second-quarter top-line performance. Moreover, strong rate-based growth in the prior quarters might have added an impetus to ED’s second-quarter revenues. (Read more: Consolidated Edison to Post Q2 Earnings: What's in Store?)
Our proven model does not predict an earnings beat for Consolidated Edison this time around. ED has an Earnings ESP of -2.28% and a Zacks Rank #3 at present.
Consolidated Edison Inc Price and EPS Surprise
Consolidated Edison Inc price-eps-surprise | Consolidated Edison Inc Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.