Will FirstEnergy (FE) Miss Earnings Estimates This Season? - Analyst Blog


FirstEnergy Corporation ( FE ), a diversified energy company, is scheduled to release second-quarter 2014 financial results before the market open on Aug 5. In the last reported quarter, the company delivered a negative earnings surprise of 4.88%. Let us see how things are shaping up for this announcement.

Factors to Consider

FirstEnergy operates one of the largest transmission networks in the U.S. and systematically invests capital to improve its quality of services. In the second quarter, the company completed inspections and equipment maintenance drill at its operating subsidiaries to prepare for the summer months and ensure service reliability.

As FirstEnergy operates in a competitive space, maintenance of quality is essential to retain and expand its customer base. A major portion of FirstEnergy's generating capacity comes from coal-fired and nuclear power units, which expose the company to environment related regulatory risks.

In the to-be-reported quarter FirstEnergy's subsidiaries Mon Power and Potomac Edison filed for a rate increase to the Public Service Commission of West Virginia. The rate request is for $103 million and the decision is expected to come by Feb 2015. Since the regulated operations comprise nearly 85% of FirstEnergy's business mix, the company depends on positive regulatory decisions to drive its modernization plan forward.

Earnings Whispers

Our proven model does not show that FirstEnergy Corporation is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP : That is because the Earnings ESP, which represents the difference between the Most Accurate estimate of 44 cents per share and the Zacks Consensus Estimate of 48 cents, is -8.33%.

Zacks Rank# 3 : FirstEnergy Corporation carries a Zacks Rank #3 (Hold). Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of -8.33% indicates that FirstEnergy is going to miss earnings estimates.

Other Stocks to Consider

Here are some companies in the same space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Consolidated Edison, Inc. ( ED ) has Earnings ESP of +9.26% and a Zacks Rank #1 (Strong Buy).

Ameren Corporation ( AEE ) has Earnings ESP of +14.04% and a Zacks Rank #2 (Buy).

Sempra Energy ( SRE ) has Earnings ESP of +3.60% and a Zacks Rank #3 (Hold).

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AMEREN CORP (AEE): Free Stock Analysis Report

SEMPRA ENERGY (SRE): Free Stock Analysis Report

CONSOL EDISON (ED): Free Stock Analysis Report

FIRSTENERGY CP (FE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AEE , SRE , ED , FE



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