Utility Stocks to Watch for Earnings on Aug 6: AEE, ED & More

So far we have witnessed a handful of stocks from the Utilities sector releasing their Q2 results. Impressively, the domestic-focused matured Utilities sector is one of the two of the 16 Zacks sectors, which is expected to deliver earnings growth.

Notably, total Q2 earnings of the Utility stocks are expected to increase 3.9% year over year, while revenues are projected to fall 2.3%. For more details on quarterly releases, you can go through our latest Earnings Preview.

Factors Likely to Influence Q2 Results

Regulated, domestic-focused utility companies are expected to have registered a decrease in demand during the second quarter, primarily due to reduced commercial and industrial activities. However, demand from the residential group might have increased due to stay-at-home directives. For instance, per a report by Reuters, the U.S. Energy Information Administration (EIA) said that business closures due to the pandemic caused weekday power demand in March and April to drop 9-13% in the U.S. central region.

Such declines in demand are likely to have hurt the sector’s revenue generation capacity to a certain extent in the second quarter. Moreover, the majority of the utilities’ decision to temporarily suspend service disconnections in the event of non-payment of dues is expected to get reflected in second-quarter results.

On a brighter note, the novel coronavirus outbreak and the resultant economic crisis forced the Federal Reserve to lower its interest rate to near-zero level earlier, which prevailed through the second quarter. This created an opportunity for utilities to refinance their existing debt and obtain new debts for their capital projects at a much cheaper rate. The cost-cutting initiatives that the utilities have adopted lately are expected to have enhanced the sector’s earnings in the ongoing reporting cycle.

Utilities Earnings in Focus

Let's take a look at some Utility stocks that are scheduled to report earnings on Aug 6.

American Electric Power Company’s AEP four-quarter average earnings surprise is 1.35%. The company’s second-quarter results are expected to have benefited from favorable weather conditions, which seem to have boosted electricity demand in its service territories. This, in turn, is likely to have contributed to top-line growth in the soon-to-be-reported quarter.

American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. price-eps-surprise | American Electric Power Company, Inc. Quote

Our proven model does not conclusively predict an earnings beat for American Electric this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

American Electric has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Read more: What's in Store for American Electric (AEP) in Q2 Earnings?)

Consolidated Edison’s ED four-quarter average negative earnings surprise is 0.98%. The company’s second-quarter earnings are expected to have benefited from a favorable mix of weather conditions, which in turn might have boosted the company’s second-quarter revenues.

Consolidated Edison Inc Price and EPS Surprise

Consolidated Edison Inc price-eps-surprise | Consolidated Edison Inc Quote

The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). (Read more: What's in Store for Consolidated Edison's (ED) Q2 Earnings?)

Ameren Corporation’s AEE four-quarter average positive earnings surprise is 0.59%. The company’s second-quarter earnings are expected to have benefited from higher residential sales that are likely to have seen significant growth.

Ameren Corporation Price and EPS Surprise

Ameren Corporation price-eps-surprise | Ameren Corporation Quote

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read more:  Ameren (AEE) to Report Q2 Earnings: What's in the Cards?

Alliant Energy’s LNT four-quarter average positive earnings surprise is 8.94%. The company’s second-quarter earnings are anticipated to have gained as stay-at-home directives are expected to have resulted in higher demand from the residential class.

Alliant Energy Corporation Price and EPS Surprise

Alliant Energy Corporation price-eps-surprise | Alliant Energy Corporation Quote

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read more: Alliant Energy (LNT) to Report Q2 Earnings: What's in Store?)

CenterPoint Energy’s CNP four-quarter average positive earnings surprise is 18.07%. The company’s second-quarter earnings are likely to have benefited from favorable weather conditions, as warmer-than-normal temperature means more usage of cooling appliances.

CenterPoint Energy, Inc. Price and EPS Surprise

CenterPoint Energy, Inc. price-eps-surprise | CenterPoint Energy, Inc. Quote

The company has an Earnings ESP of +3.90% and a Zacks Rank #3. (Read more: What's in Store for CenterPoint Energy (CNP) in Q2 Earnings?)

AES Corp’s. AES four-quarter average positive earnings surprise is 3.25%. The company is likely to have incurred higher interest expenses in the second quarter, as a result of drawing on its revolving credit facilities to reinforce liquidity. This might also have weighed on the company’s quarterly earnings.

The AES Corporation Price and EPS Surprise

The AES Corporation price-eps-surprise | The AES Corporation Quote

The company has an Earnings ESP of 0.00% and a Zacks Rank #4. (Read more: AES Corp. (AES) to Report Q2 Earnings: What's in the Cards?)

Pinnacle West Capital’s PNW four-quarter average positive earnings surprise is 3.25%. Cost-management initiatives undertaken by the company are expected to have been significant positives in the second quarter.

Pinnacle West Capital Corporation Price and EPS Surprise

Pinnacle West Capital Corporation price-eps-surprise | Pinnacle West Capital Corporation Quote

The company has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read more: Pinnacle West (PNW) to Post Q2 Earnings: What's in Store?)

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