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SCANA Corp (SCG): Is a Beat in Store this Earnings Season?

Integrated energy company, SCANA CorporationSCG is expected to report fourth-quarter 2016 earnings on Feb 16, before the market opens.

Last quarter, the company reported earnings of $1.32 per share that beat the Zacks Consensus Estimate of $1.05. The quarterly earnings also increased from year-earlier quarter earnings of $1.04 per share.

Scana Corporation Price and EPS Surprise

Scana Corporation Price and EPS Surprise | Scana Corporation Quote

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

Earnings Whispers

Our proven model shows that SCANA Corp. is likely to beat on earnings this time 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 +3.23%. This is because the Most Accurate estimate stands at 96 cents, while the Zacks Consensus Estimate is pegged at 93 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Zacks Rank : SCANA Corp. carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings. The combination of SCANA Corp.'s favorable Zacks Rank and a positive ESP makes us confident about an earnings beat.

Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors Likely to Influence this Quarter

SCANA Corp. is well positioned to benefit from a positive regulatory environment as it has a low risk business with outstanding customer growth and operational efficiency. These in turn are favorable for stable cash flow generation and growth. Another positive for shareholders is SCANA Corp.'s utility business mix. The majority of the company's total earnings come from the regulated electricity and natural gas utilities business. Given the strong fundamentals, the company is poised to achieve significant share price appreciation and earnings growth in the to-be-reported quarter.

Moreover, SCANA Corp.'s nuclear expansion project is a catalyst for future earnings growth. Given the company's financing plan, construction budget and schedule, we believe that it will be able to fund its nuclear expansion project. Management expects 2016 earnings to be in the range of $3.90-$4.10 per share. It expects to achieve the target through industrial expansion and continued customer growth. As the company's capex escalates with the new nuclear projects and the investments are recognized in the rate base, the regulated earnings power is expected to improve.

However, we are concerned about SCANA Corp.'s high debt level and the overall business risks associated with the nuclear generation construction project. The last nuclear generation construction cycle severely affected the stocks of numerous electric utilities. As expected, this generates a legitimate level of investor anxiety.

Stocks to Consider

Here are some companies in the energy sector that investors may consider, as our model shows that they have the right combination of elements to beat estimates this quarter:

Sunrun Inc. RUN , which is expected to release fourth-quarter earnings results on Mar 8, has an Earnings ESP of +244.44% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Cimarex Energy Co. XEC has an Earnings ESP of +1.72% and a Zacks Rank #3. It is expected to release earnings results on Feb 15.

Newfield Exploration Company NFX has an Earnings ESP of +10.81% and a Zacks Rank #3. The company is expected to release earnings results on Feb 22.

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Scana Corporation (SCG): Free Stock Analysis Report

Newfield Exploration Company (NFX): Free Stock Analysis Report

Cimarex Energy Co (XEC): Free Stock Analysis Report

Sunrun Inc. (RUN): 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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