Duke Energy Corp.
) is slated to report first-quarter 2014 results on May 7, 2014.
Last quarter, the company delivered a positive 6.38% earnings
surprise. Let's see how things are shaping up for the company
prior to the announcement.
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Factors to Consider this Past Quarter
Charlotte, NC based Duke Energy is the largest U.S. utility
offering efficient power and energy services across various
states in the U.S. and several other international locations.
In the first quarter 2014, the company's earnings will likely
increase from the year-ago level, mainly because of the cold wave
that hit the U.S. this winter. It is likely to have boosted
demand for electricity.
Again, Duke Energy is focused on expanding its renewable
portfolio given the aggressive pro-environment stance in the U.S.
During the quarter, Duke Energy Renewables, a business unit of
Duke Energy, entered into an agreement with an Australian
renewable energy firm Infigen Energy under which it acquired two
California solar projects from the latter. Once the projects are
complete, it will double Duke Energy's solar power capacity in
Duke Energy Renewables also entered into an agreement with
Swinerton Renewable Energy, wherein Swinerton Renewable will
provide turnkey engineering, procurement, and construction
services to the company's two solar power projects, Pumpjack and
Wildwood, located near Bakersfield, CA.
Having said so, the company will record a pretax charge of $1
billion to $2 billion in the first quarter of 2014 from the sale
of its stake in 13 power plants in the nation's Midwest after
Ohio regulators denied its request to raise rates. The plants
together have a capacity of 6,600 megawatts.
Our proven model does not conclusively show that Duke Energy is
likely to beat the Zacks Consensus Estimate this quarter. This is
because a stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. However, this is
not the case here as elaborated below.
Negative Zacks ESP:
Earnings ESP represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate. The Most Accurate
estimate stands at $1.09 while the Zacks Consensus Estimate is
higher at $1.10 resulting in an ESP of -0.91%.
Despite Duke Energy's Zacks Rank #3 (Hold), the negative ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions.
Stocks to Consider
While an earnings beat looks uncertain for Duke Energy, here are
some energy companies to consider, as our model shows that these
have the right combination of elements to post an earnings beat
Westar Energy, Inc.
) with Earnings ESP of +2.27% and a Zacks Rank #2 (Buy).
NRG Yield, Inc.
) with Earnings ESP of +23.53% and a Zacks Rank #2.
) with earnings ESP of +6.25% and a Zacks Rank #3.