Will SCANA (SCG) Disappoint Investors This Earnings Season?

SCANA CorporationSCG is scheduled to report third-quarter 2017 earnings before the opening bell on Oct 26.

Last quarter, the company delivered a positive earnings surprise of 14.86%. Moreover, SCANAhas an average positive earnings surprise of 5.25% for the last four quarters.

Which Way Are Estimates Treading?

Let's take a look at the estimate revisions in order to get a clear picture of analyst opinion on the stock before the earnings release.

The Zacks Consensus Estimate for earnings of $1.14 for the third quarter has been stable in the last seven days. The estimate reflects a year-over-year decline of 13.4%.

Factors Likely to Influence Earnings

Since 2015, the company's long-term debt load has increased substantially. Also, during the first half of 2017, SCANA's cash balance has declined drastically, reflecting balance sheet weakness. The company's high debt level and overall business risks associated with the nuclear generation construction project are a major concern.

Moreover, the company's free cash flow has been negative since 2015, reflecting persistently weak operations. We are also concerned about the company's rising operating expenses since the beginning of 2017.

Price Performance in Q3

During the quarter, the company lost 27.6%, underperforming its industry's gain of 2.7%.

Earnings Whispers

Our proven model does not conclusively show that SCANA will beat estimates this quarter. That 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. That is not the case here as you will see below.

Zacks ESP: Earnings ESP for the company is -2.48% as the Most Accurate estimate stands at $1.12 while the Zacks Consensus Estimate is pegged higher at $1.14. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: SCANA carries a Zacks Rank #5 (Strong Sell). Please note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

While an earnings beat looks uncertain for SCANA, here are some firms that you may want to consider on the basis of our model. These companies have the right combination of elements to post an earnings beat this quarter:

Noble Midstream Partners LP NBLX , headquartered in Houston, TX, has diversified energy infrastructure properties. The company has an Earnings ESP of +1.91% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Tesoro Corporation ANDV , based in San Antonio, TX, is a leading refining player. The company has an Earnings ESP of +5.02% and a Zacks Rank #3.

Gulfport Energy Corporation GPOR , headquartered in Oklahoma City, OK, is an upstream energy player. The company has an Earnings ESP of +0.97% and a Zacks Rank #3.

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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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