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WEC Energy (WEC) Earnings: What Awaits the Stock in Q4?

WEC Energy GroupWEC is slated to report fourth-quarter 2016 results before the market opens on Feb 1. In the last reported quarter, the company earnings comfortably surpassed the Zacks Consensus Estimate by 9 cents. Over the trailing four quarters, the company has delivered an average positive earnings surprise of 6.38%, successfully beating estimates on three occasions. Let's see how things are shaping up for this earnings season.

Factors to Consider

WEC Energy has an earnings sharing mechanism in place as part of the Integrys acquisition, which could impact its overall earnings potential. Since Wisconsin Electric and Wisconsin Gas constitute nearly 60% of WEC Energy's regulated utilities, 60% of the company's earnings are subject to the earnings sharing mechanism.

WEC Energy's maintenance expenses are expected to increase in the fourth quarter on a year-over-year basis. This will adversely impact the margins of the company.

However, WEC Energy is expected to gain from the improving economic conditions in its service territories, which is leading to an increase in its customer base.

Earnings Whispers

Our proven model does not conclusively show that WEC Energy is likely to beat earnings this quarter as it does not possess the key components. 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:

WEC Energy Group, Inc. Price and EPS Surprise

WEC Energy Group, Inc. Price and EPS Surprise | WEC Energy Group, Inc. Quote

Zacks ESP : The Earnings ESP, which represents the difference between the Most Accurate estimate of 60 cents and the Zacks Consensus Estimate of 62 cents, is -3.23%.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : Although WEC Energy's Zacks Rank #2 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult this quarter.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Price Movement

Shares of WEC Energy increased 3.78% over the past 12 months, outperforming the Zacks categorized Utility - Electric Power industry's gain of 0.97%.

Stocks to Consider

Here are some companies that you may want to consider instead, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Exelon Corporation EXC is expected to release fourth-quarter 2016 results on Feb 8, before the market opens. The company has an Earnings ESP of +2.27% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here

Pinnacle West Capital Corporation PNW has an Earnings ESP of +4.08% and a Zacks Rank #2. The company is expected to release fourth-quarter 2016 results on Feb 24, before the market opens.

Black Hills Corporation BKH has an Earnings ESP of +7.07% and a Zacks Rank #2. The company is expected to release fourth-quarter 2016 results after the market closes on Feb 1.

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WEC Energy Group, Inc. (WEC): Free Stock Analysis Report

Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report

Exelon Corporation (EXC): Free Stock Analysis Report

Black Hills Corporation (BKH): 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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