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Can AGL Resources (GAS) Earnings Pull a Surprise in Q3?

AGL Resources IncGAS is expected to report third-quarter 2015 results on Nov 9.

The energy services holding player's average earnings surprise during the last four quarters came at negative 10.50%. Let's see how things are shaping up during this earnings season.

Factors to Consider This Quarter

AGL Resources has a relatively low-risk earnings growth profile. Positioned in a niche industry with high barriers to entry, this energy services holding company enjoys a near-monopoly status in its area of operations. The company also has a large and stable customer profile, and a strong liquidity position that are likely to have benefited its business in the quarter under review.

Moreover, there is a growing need for electricity generation with the constant rise in population. Since the main business of the company is distributing natural gas - used for generating electricity - this might be a profitable quarter for AGL Resources.

It will be interesting to see whether the events drive up better-than-expected results.

What Our Model Indicates

Our proven model does not conclusively show that AGL Resources is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 20 cents.

Zacks Rank: AGL Resources has a Zacks Rank #3, which increases the predictive power of ESP. But we need a positive ESP to be confident of a beat.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies in the energy sector with the right combination of elements to post an earnings beat this quarter:

EV Energy Partners LP EVEP with an Earnings ESP of + 27.27% and a Zacks Rank #3. The partnership is anticipated to release earnings results on Nov 9.

Warren Resources Inc. WRES has an Earnings ESP of + 9.09% and a Zacks Rank #3. The company is likely to release earnings results on Nov 9.

Seadrill Partners LLC SDLP has an Earnings ESP of +12.00% and a Zacks Rank #1. The partnership is expected to release earnings results on Nov 25.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AGL RESOURCES (GAS): Free Stock Analysis Report

EV ENERGY PTNR (EVEP): Free Stock Analysis Report

SEADRILL PTNRS (SDLP): Free Stock Analysis Report

WARREN RSRCS (WRES): 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 Nasdaq, Inc.


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

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