American Electric Power Co., Inc.
) will release its first quarter 2014 financial results before
the market bell on Apr 25, 2014. This energy company registered a
positive earnings surprise last quarter. We expect the company to
beat again this quarter.
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Why a Likely Positive Surprise?
Our proven model shows that American Electric Power is likely to
beat earnings because it has the right combination of two key
ingredients. A stock needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for
this to happen. This is the case here.
Positive Zacks ESP
: This is because the Most Accurate estimate stands at 95 cents
while the Zacks Consensus Estimate is 91 cents , resulting in
+4.40% ESP. This is a meaningful and leading indicator of a
likely positive earnings surprise.
Zacks Rank #3 (Hold)
: American Electric Power's Zacks Rank #3 combined with a
positive ESP increases the possibility of an earnings beat. The
Sell rated stocks (#4 and 5) should never be considered going
into an earnings announcement.
What is Driving the Better-than-Expected
2013 was a profitable year for American Electric Power and it
expects to improve upon its performance this year. The ongoing
investments in transmission projects and in regulated as well as
non-regulated businesses are set to drive this utility's
American Electric Power is also focused on expanding its line of
businesses. In Feb 2014, its unit AEP River Operations started a
new Liquids Division with the receipt of the first of 20 tank
barges. The company will transport liquid commodities, including
petrochemicals and agricultural chemicals, which will definitely
boost its profits.
In addition, heightened industrial activity in its service
territories is expected to drive an additional 270 megawatt of
fresh demand. This will to a large extent compensate for the loss
of Ormet, an aluminum smelter in Ohio, which shut down in October
Other Stocks to Consider
Here are some other companies tied to the electric utility
industry worth considering on the basis of our model, which shows
that they have the right combination of elements to post an
earnings beat this quarter.
Wisconsin Energy Corp.
) has an earnings ESP of +2.41% and carries a Zacks Rank #2
) has an earnings ESP of +16.67% and carries a Zacks Rank #2
) has an earnings ESP of +6.25% and carries a Zacks Rank #2