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Eversource Energy (ES): Will Mild Winter Hurt Q4 Earnings?

Eversource EnergyES will release fourth-quarter 2015 financial results before the market opens on Feb 5, 2016.In the previous quarter, the company reported a flat earnings surprise, with an average positive earnings surprise of 5.87% in the trailing four quarters. Let's see how things are turning out for the upcoming quarter.

Factors at Play

A milder start to winter saw Eversource Energy's service territories experiencing record warmest temperatures in December. Lower household expenditure on heating will adversely impact revenues in the to-be-reported quarter.

Eversource Energy is currently focused on investing in distribution infrastructure and utility transmission, which will not only enable the company to provide reliable services to its customers but also help in achieving its long-term earnings growth target of 6% to 8%.

Moreover, the company's focus on renewable energy generation would help it to meet renewable energy mandates by state governments and enjoy incentives offered by state and federal programs.

Earnings Whispers

Our proven model does not conclusively show that Eversource Energy 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) for this to happen. That is not the case here as you will see below.

Zacks ESP : Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.54%. This is because the Most Accurate estimate is pegged at 64 cents while the Zacks Consensus Estimate stands at 65 cents.

Zacks Rank : Eversource Energy's Zacks Rank #4 (Sell), which when combined with a negative ESP, makes an earnings beat unlikely.

As it is, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:

The AES Corporation AES has an earnings ESP of +3.13% and carries a Zacks Rank #3.

Consolidated Edison, Inc. ED has an earnings ESP of +1.82% and carries a Zacks Rank #3.

NRG Energy, Inc. NRG has an earnings ESP of +26.19% and carries a Zacks Rank #3.

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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

CONSOL EDISON (ED): Free Stock Analysis Report

AES CORP (AES): Free Stock Analysis Report

NRG ENERGY INC (NRG): Free Stock Analysis Report

EVERSOURCE EGY (ES): 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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