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Will Edison International (EIX) Beat on Earnings Yet Again? - Analyst Blog

Edison International ( EIX ) is set to release its fourth-quarter 2014 results after the closing bell on Feb 24, 2015. We expect the company to beat expectations when it reports its results on the day.

In the preceding quarter, Edison International had delivered a positive 12.59% earnings surprise. Also, the company has maintained an average positive earnings surprise of 18.50% over the past four quarters.

Let us see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Edison International is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate of 87 cents and the Zacks Consensus Estimate of 83 cents, is +4.82%. This is a meaningful and leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: The company currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings.

The combination of Edison International's Zacks Rank #3 and +4.82% ESP makes us confident of an earnings beat this quarter.

However, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement especially when the company is witnessing negative earnings revision.

What is Driving the Better-than-Expected Earnings?

Rosemead, CA-based Edison International, through its subsidiaries, engages in the supply of electric energy in central, coastal and southern California. The company's chief unit, Southern California Edison ("SCE"), operates in a supportive regulatory environment that allows the utility company to grow systematically.

In addition, Edison International is focused on improving the quality of its service through the implementation of infrastructure upgrades. In Oct 2014, the company commenced its vital infrastructure-upgrade program in Long Beach with an estimated investment of over $1.1 million.

Moreover, in the fourth quarter, SCE entered into a contract wherein it will be sourcing power worth 2,221 megawatts from diverse sources. This will be enough to power about 9,50,000 homes and enable the company to meet long-term electricity needs of its customers. Focus on clean sources of energy will ensure that the company meets stringent environment regulations. It will also enable Edison International to deliver reliable and affordable services, thus creating customer value, thereby serving the company well in the future.

Other Stocks to Consider

Edison International is not the only firm looking up this earnings season. We also see likely earnings beat coming from these industry peers:

OGE Energy Corp. ( OGE ) has an Earnings ESP of +11.11% and carries a Zacks Rank #3.

Pattern Energy Group Inc. ( PEGI ) has an Earnings ESP of +420.00% and carries a Zacks Rank #3.

UIL Holdings Corporation ( UIL ) has an Earnings ESP of +3.23% and carries a Zacks Rank #3.

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EDISON INTL (EIX): Free Stock Analysis Report

OGE ENERGY CORP (OGE): Free Stock Analysis Report

UIL HOLDINGS CP (UIL): Free Stock Analysis Report

PATTERN ENERGY (PEGI): 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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