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Utilities Earnings Lined Up for May 3: ES, EXC, NI, ATO

The Zacks Utilities sector’s first-quarter earnings are expected to have benefited from a revival of demand in the commercial and industrial groups of customers, and an increase in the efficiency of services. However, mild weather conditions during the period may have had an adverse effect on demand.

Per the latest Earnings Preview, the Zacks Utilities sector’s first-quarter 2023 earnings are expected to decline 4.7% while revenues are estimated to improve 7.2%. The capital-intensive utility stocks were impacted by the ongoing increase in interest rates, but new rates implemented in their service territories and customer growth boosted profits.

Factors to Consider

Domestic-focused companies operating in the sector are devoted to cost management and implementing energy-efficiency programs. New rates and customer additions are creating fresh demand for utilities. Investment in strengthening the infrastructure is allowing utilities to provide services 24X7, leading to stable earnings. Moreover, the players are insulated from the adverse impact of currency fluctuation. The utilities are likely to have gained from these favorable conditions in the January-March period.

The passage of the Inflation Reduction Act (IRA) should support and accelerate the utilities' transition toward clean energy sources. IRA has removed the uncertainties relating to federal incentives provided for renewable sources usage. The act entails opportunities for a wide range of low-cost clean energy solutions in a predictable way for a long time and would create earnings visibility.

However, utilities need massive funds to upgrade, maintain and expand their infrastructure and operations, and are capital-intensive in nature. The performance of the utilities is likely to have been adversely impacted by the increase in interest rates from near-zero levels. The increase in borrowing costs in 2022 is expected to continue in 2023 and may have pushed up capital servicing expenses and reduced net income in the first quarter.

According to the Zacks model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eversource Energy’s ES results are expected to benefit from new rates that became effective during the last quarter of 2022 and contributions from transmission assets. However, higher depreciation and interest expenses might have offset some of the positives. ( Read more: Eversource Energy to Post Q1 Earnings: What's in Store?)

Our proven model does conclusively predict an earnings beat for Eversource this time around. ES has an Earnings ESP of +0.49% and a Zacks Rank #3.

 

Eversource Energy Price and EPS Surprise

Eversource Energy Price and EPS Surprise
Eversource Energy Price and EPS Surprise

Eversource Energy price-eps-surprise | Eversource Energy Quote

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Exelon Corporation’s EXC first-quarter earnings are expected to have benefited from the implementation of new distribution rates at its DPL, ComEd and PECO segments. The bottom line is also likely to have gained from a reduction in volumetric risk as more than 73% of volumes are decoupled. ( Read more: Exelon to Report Q1 Earnings: Here's What to Expect)

Our proven model does not conclusively predict an earnings beat for Exelon this time around. EXC has an Earnings ESP of 0.00% and a Zacks Rank #3.

 

Exelon Corporation Price and EPS Surprise

Exelon Corporation Price and EPS Surprise
Exelon Corporation Price and EPS Surprise

Exelon Corporation price-eps-surprise | Exelon Corporation Quote


NiSource Inc.’s NI first-quarter earnings are expected to have benefited from the new electric and gas rates that came into effect in the past 12 months. Cost-saving initiatives and efficiency in operation are keeping expenses down, boosting earnings. ( Read more: NiSource to Report Q1 Earnings: Here's What to Expect)

Our proven model does not conclusively predict an earnings beat for NiSource this time around. NI has an Earnings ESP of 0.00% and a Zacks Rank #2.

NiSource, Inc Price and EPS Surprise

NiSource, Inc Price and EPS Surprise
NiSource, Inc Price and EPS Surprise

NiSource, Inc price-eps-surprise | NiSource, Inc Quote


Atmos Energy’s ATO fiscal second-quarter earnings are likely to have benefited from the implementation of new rates in its service territories and a major contribution coming from residential customers. However, higher operation and maintenance expenses, and interest expenses might have adversely impacted earnings. ( Read More: Atmos Energy to Post Q2 Earnings: What's in the Cards?)

Our proven model does not conclusively predict an earnings beat for Atmos Energy this time around. ATO has an Earnings ESP of -1.01% and a Zacks Rank #4 (Sell).

Atmos Energy Corporation Price and EPS Surprise

Atmos Energy Corporation Price and EPS Surprise
Atmos Energy Corporation Price and EPS Surprise

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

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Exelon Corporation (EXC) : Free Stock Analysis Report

NiSource, Inc (NI) : Free Stock Analysis Report

Atmos Energy Corporation (ATO) : Free Stock Analysis Report

Eversource Energy (ES) : Free Stock Analysis Report

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