Public Service Enterprise Group Inc. PEG is scheduled to report fourth-quarter 2017 results on Feb 23, before the opening bell.
Last quarter, the utility's earnings missed the Zacks Consensus Estimate by 2.38%. However, Public Service Enterprise outperformed the same in the trailing four quarters, the average beat being 4.94%.
Let's see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Public Service Enterprise is likely to beat earnings this quarter. Notably, 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. Public Service Enterprise has both these attributes, as mentioned below:
Zacks ESP : The company has an Earnings ESP of +1.92%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank : Public Service Enterprise carries a Zacks Rank #3.
Meanwhile, 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.
Factors at Play
In June 2017, Public Service Enterprise submitted the planned update to its Energy Strong cost recovery petition, to include Energy Strong investments in service as of May 31, 2017. This filing requested estimated annual increases in electric and gas revenues of $16 million and $2 million, respectively. Last August, the BPU approved these raised rates effective Sep 1, 2017.
Moreover, in June 2017, the company made its annual Basic Gas Supply Services (BGSS) filing with the Board of Public Utility (BPU) requesting an increase in the BGSS rate from approximately 34 cents to 37 cents per therm, effective Oct 1, 2017. Therefore, we may expect these to duly get reflected in the company's fourth-quarter results in the form of improved sales as well as earnings growth.
In line with this, for the fourth quarter, the Zacks Consensus Estimate for earnings of 56 cents per share reflects year-over-year growth of 3.7%. Meanwhile, the same for revenues is pegged at $2.36 billion, depicting an increase of 12.8%.
On the flip side, the unemployment rate in Public Service Enterprise's service territories is worse than the national average. A deteriorating economy is likely to lower the utility demand in the state, which in turn may weigh on the company's quarterly performance.
Nevertheless, earlier-than-expected snowfall in December 2017 in New Jersey drove demand for electricity substantially in the city. This in turn is expected to drive Public Service Enterprise's yet-to-be-reported results.
Public Service Enterprise Group Incorporated Price and EPS Surprise
Other Stocks that Warrant a Look
Here are a few other utility stocks which have the right combination of elements to post an earnings beat this quarter:
Edison International EIX will report fourth-quarter results on Feb 22. The company has an Earnings ESP of +1.44% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .
Pinnacle West Capital PNW is slated to release fourth-quarter results on Feb 23. The company has an Earnings ESP of +12.20% and a Zacks Rank #3.
Eversource Energy ES will report fourth-quarter results on Feb 22. The company has an Earnings ESP of +0.66% and a Zacks Rank #3.
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