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Public Service Enterprise (PEG): What's Up for Q4 Earnings?

Public Service Enterprise Group Inc.PEG is scheduled to report fourth-quarter and full-year 2016 results before the opening bell on Feb 24.

Last quarter, the utility's earnings surpassed the Zacks Consensus Estimate by 8.64%. Moreover, Public Service Enterprise outperformed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 3.77%.

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

Factors at Play

Public Service Enterprise Group continues to meet its capital investment and operations-related goals. The company is expected to invest $1.8 billion during 2016 as part of the five year $7.1 billion investment program to upgrade and expand its transmission network. This investment in transmission is expected to grow to represent approximately 45% of year-end 2016's rate base.

On the flip side, the company's Power subsidiary outlook for 2016 continues to take into account the extended outages at Salem nuclear power plants as well as refueling outage at Hope Creek nuclear station. These factors could hurt its financial performance and limit profitability for 2016.

Moreover, the company has lowered the higher limit of its earnings guidance. It currently expects earnings in the range of $2.80-$2.95, compared with the earlier earnings guidance range of $2.80-$3.00 per share.

With respect to its fourth-quarter results, management expects to witness an increase in the company's O&M expense, given the cost associated with the refueling of its fully owned Hope Creek nuclear station. Moreover, as per management, retirement of Hudson and Mercer coal fire generation stations will continue to have an impact on Power's net income in the fourth quarter.

On a brighter note, weather will play an important role in the results of the to-be-reported quarter. With above-average temperatures, demand for utility services is expected to get a boost.

Overall, for the fourth quarter, the Zacks Consensus Estimate for earnings stands at 52 cents, reflecting a year-over-year increase of 4.33%, while that for revenues is pegged at $2.29 billion, translating into 0.45% improvement.

Earnings Whispers

Our proven model does not conclusively show that Public Service Enterprise Group is likely to beat 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: Public Service Enterprise Group has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 52 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Public Service Enterprise Group carries a Zacks Rank #3, which increases the predictive power of ESP. However, the Earnings ESP of 0.00% makes surprise prediction difficult.

Public Service Enterprise Group Incorporated Price and EPS Surprise

Public Service Enterprise Group Incorporated Price and EPS Surprise | Public Service Enterprise Group Incorporated Quote

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 that Warrant a Look

Here are a few Utility stocks that have the right combination of elements to post an earnings beat this quarter:

Spark Energy, Inc. SPKE is set to release quarterly report on Mar 9. The company currently carriers a Zacks Rank #1 and has an Earnings ESP of +14.43%.

Chesapeake Utilities Corporation CPK is set to release its quarterly report on Feb 28. The company currently carriers a Zacks Rank #3 and has an Earnings ESP of +4.11%.

El Paso Electric Company EE is set to release its quarterly report on Feb 23. The company currently carriers a Zacks Rank #3 and has an Earnings ESP of +20.00%.

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Public Service Enterprise Group Incorporated (PEG): Free Stock Analysis Report

El Paso Electric Company (EE): Free Stock Analysis Report

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Spark Energy, Inc. (SPKE): 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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