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Consolidated Edison (ED) Q4 Earnings: What Awaits the Stock?

New York-based Consolidated Edison, Inc.ED is set to release fourth-quarter 2016 results after the closing bell on Feb 16.

Last quarter, the company delivered a positive earnings surprise of 0.67%. Moreover, Consolidated Edison has outperformed the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive surprise of 3.45%.

Let's see how things are shaping up prior to this announcement.

Factors at Play

Consolidated Edison has gradually been converting some of its operations to gas, which is safer for the environment. In fact, the company has been investing steadily in its renewable generation assets. In the first nine months of 2016, the company invested $1,281 million in renewable generation, and electric and gas transmission projects.

Per its earlier announcement, management will continue with its renewable investments in the fourth quarter of 2016 as well. This is in line with its earlier stated plan to invest $3,168 million in energy delivery systems and $985 million in renewable electric production projects in 2016. We expect the to-be-reported quarter's results to reflect the continuance of this investment.

Moreover, the company's service territories witnessed above-average temperatures during the fourth quarter. This should in fact lead to increased electric sales in these regions, which in turn, is expected to boost the top line.

Again, for 2016, the company revised its earnings guidance to the range of $3.90 to $4.00 from the prior guidance of $3.85-$4.05, during the third-quarter earnings call.

For the fourth quarter, the Zacks Consensus Estimate for earnings reflects an increase of 7.10% year-over-year, while sales are anticipated to be up 16.86% to $3.16 billion.

However, disruption in the wholesale energy markets, stringent utility regulations and interruption in operation of its generating units, could be detrimental for Consolidated Edison's growth.

Consolidated Edison Inc Price and EPS Surprise

Consolidated Edison Inc Price and EPS Surprise | Consolidated Edison Inc Quote

Earnings Whispers

Our proven model does not conclusively show that Consolidated Edison is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: Consolidated Edison has an Earnings ESP of 0.00%. This is because the Most Accurate estimate of 65 cents stands in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Consolidated Edison's Zacks Rank #4 (Sell), when combined with an Earnings ESP of 0.00%, makes our surprise prediction difficult for this quarter.

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 to Consider

Here are a few operators in the electric utility space that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Spark Energy, Inc. SPKE will report fourth-quarter results on Mar 9. The company has an Earnings ESP of +14.43% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

SCANA Corporation SCG has an Earnings ESP of +3.23% and a Zacks Rank #2. The company will report fourth-quarter results on Feb 16.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +2.04% and a Zacks Rank #2. The company is scheduled to release fourth-quarter results on Feb 24.

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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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