IDACORP Inc.IDA , an electric utility, will release third-quarter 2016 financial results on Oct 27, before the opening bell.
Last quarter, IDACORP posted a positive earnings surprise of 14.29%. However, in the trailing four quarters, the company has recorded an average negative surprise of 0.24%. Let's see how things are shaping up for this announcement.
Factors to Consider
Like last quarter, IDACORP expects to see an increase in its customer base on the back of improving economic conditions in its service territory, which is being driven by growing manufacturing activities in these regions. This will in turn translate into higher demand for electricity.
Weather will also play an important role during the third quarter. Historically, the company's performance in the second and third quarters has been boosted by the combination of cooling load and irrigation load. Moreover, above-average temperatures will drive demand for the company's services.
On the flip side, IDACORP operates several hydroelectric generation plants that require relicensing and certain other costs. Moreover, the permitting process for operating hydro units is quite cumbersome and expensive, often leading to significant capital expenditures.
IDACORP INC Price and EPS Surprise
Our proven model does not conclusively show that IDACORP is likely to beat estimates 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. However, that is not the case here as you will see below.
Zacks ESP : The Earnings ESP is -5.10%. This is because the Most Accurate estimate stands at $1.49, while the Zacks Consensus Estimate is pegged higher at $1.57.
Zacks Rank : Although IDACORP's Zacks Rank #3 (Hold) increase the predictive power of ESP, its negative ESP makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a few utility companies that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
CMS Energy CMS is expected to release third-quarter 2016 results on Oct 27, before the market opens. The company has an Earnings ESP of +3.33% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
DTE Energy Company DTE has an Earnings ESP of +3.25% and a Zacks Rank #2. The company is expected to release third-quarter 2016 results on Oct 26, before the market opens.
Ameren Corporation AEE is slated to release third-quarter 2016 results before the market opens on Nov 4. The company has a Zacks Rank #2 and an Earnings ESP of +2.9%.
Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
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