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FirstEnergy (FE): Will it Surprise this Earnings Season?

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We expect FirstEnergy Corp.FE to beat estimates when it reports fourth-quarter 2016 results on Feb 21, after market close.

Last quarter, the company posted a positive earnings surprise of 18.42%, with a four-quarter average of a positive 7.34%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that FirstEnergy is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.56%. This is because the Most Accurate estimate is pegged at 40 cents while the Zacks Consensus Estimate stands at 39 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

FirstEnergy Corporation Price and EPS Surprise

FirstEnergy Corporation Price and EPS Surprise | FirstEnergy Corporation Quote

Zacks Rank: FirstEnergy has a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) and 3 have a significantly higher chance of beating earnings. Stocks with Zacks Rank #4 or 5 (Sell rated), on the other hand, should never be considered going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

The combination of FirstEnergy's favorable Zacks Rank and positive ESP makes us reasonably confident of an earnings beat this season.

What's Driving the Better-than-Expected Results?

In the industrial sector, sales are expected to increase in the fourth quarter driven by stronger demand from the shale, coal mining and steel industries, as well as the chemical and auto sectors. This will create demand for utility services, thereby aiding FirstEnergy's top line.

However, above-average temperatures during the fourth quarter in FirstEnergy's service territories are expected to hurt its top line.

Stocks to Consider

Here are a few stocks in the utility space worth considering as our model shows that they have the right combination of elements to post an earnings beat this quarter:

The Southern Company SO is slated to report earnings on Feb 22. It is has an Earnings ESP of +6.45% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

El Paso Electric Company EE has an Earnings ESP of +20% and a Zacks Rank #3. It is scheduled to release its quarterly numbers on Feb 23.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +2.04% and a Zacks Rank #2. It is slated to report earnings on Feb 24.

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Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report

Southern Company (The) (SO): Free Stock Analysis Report

FirstEnergy Corporation (FE): Free Stock Analysis Report

El Paso Electric Company (EE): 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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