) is set to report its fourth-quarter and full-year 2012 results
on Feb 19, 2013. Last quarter, the company reported a positive
surprise of 7.69%. Let's see how things are shaping up prior to
Factors to Consider This Quarter
As an outcome of Hurricane Sandy, Northeast Utilities invested a
substantial amount to repair its existing facilities and
construct new utility delivery systems in parts of New York and
New Jersey. We expect this unexpected spending to impact the
company's fourth-quarter 2012 performance.
Northeast Utilities has the largest transmission system in the
New England region with several new projects in the pipeline. As
the company has already invested considerably in those projects,
delay or cancellation of these projects will hamper the company's
near-term financial performance.
However, we consider the Northeast Utilities NSTAR-merger as a
positive move for Northeast Utilities' future performance. The
company has already experienced its effects in third-quarter 2012
results with strong performance from the transmission segment.
The merger will allow the company to increase its scale of
operations and widen its customer base, and eventually enjoy
Our proven model does not conclusively show that Northeast
Utilities is likely to beat earnings this quarter. That is
because a stock needs to have both a positive Expected Surprise
Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not
the case here as you will see below.
Positive Zacks ESP:
This is because the Most Accurate estimate stands at 60 cents per
share, while the Zacks Consensus Estimate is pegged at 59 cents
per share. This comes to a difference of +1.70%.
Zacks Rank #4 (Sell):
Northeast Utilities with a Zacks Rank #4 (Sell), lowers the
possibility of an earnings surprise. However, the Zacks Rank #4
when combined with a positive ESP makes surprise prediction
difficult. We also caution against stocks with Zacks Rank #5
(Strong Sell) going into the earnings announcement, especially
when the company is experiencing negative estimate revision
Other Stocks to Consider
Here are some other companies from the sector you may want to
consider as our model shows that these have the right combination
of elements to post an earnings beat this quarter:
) has earnings ESP of +75.00% and Zacks Rank #3 (Hold)
NV Energy, Inc.
) has earnings ESP of +14.29% and Zacks Rank #3 (Hold)
) has earnings ESP of +1.75% and Zacks Rank #3 (Hold)
DYNEGY INC-NEW (DYN): Free Stock Analysis
NORTHEAST UTIL (NU): Free Stock Analysis
NV ENERGY INC (NVE): Free Stock Analysis
PG&E CORP (PCG): Free Stock Analysis
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