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Can SCANA Corp (SCG) Earnings Surprise Estimates in Q1?

SCANA Corporation SCG is expected to report first-quarter 2016 earnings on Apr 28.
 
In the last reported quarter, the company’s earnings of 83 cents per share came above the Zacks Consensus Estimate of 77 cents. Also, earnings increased from the year-ago figure of 73 cents. SCANA’s earnings beat the Zacks Consensus Estimate in three out of the trailing four quarters. Let’s see how things are shaping up prior to the announcement.
 
Factors Likely to Influence Earnings
 
SCANA’s nuclear expansion project is a catalyst to earnings growth. Given SCANA’s financing plan, construction budget and schedule, we believe that the company will be able to fund its nuclear expansion project on the back of industrial expansion and continued customer growth. As the company's capex escalates with new nuclear projects and investments are recognized in the rate base, its regulated earnings power is expected to improve in the quarter to be reported.
 
The company is well positioned in a positive regulatory environment, having a low-risk business with outstanding customer growth and operational efficiency. These, in turn, should favor cash flow growth in the first quarter.
 
Another positive for the company’s shareholders is its utility business mix. The majority of the company’s earnings come from the regulated electricity and natural gas utilities’ business. SCANA is continuously building new electricity generation plants within its service territories to meet growing demand in the region. The company expects 2016 earnings in the range of $3.90–$4.10 per share. Moreover, the company targets an average annual growth rate of 4–6% over the next three to five years.

Overall activities of SCANA were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the first quarter fell to $1.37 cents from $1.38 cents per share over the last 60 days.
 
Earnings Whispers
 
Our proven model does not conclusively show that SCANA Corp. is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
 
Zacks ESP: SCANA has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.37.
 
Zacks Rank: Though the company’s Zacks Rank #3 (Hold) increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.
 
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
 
Stocks to Consider
 

Here are some companies from the energy space that, according to our model, have the right combination of elements to post an earnings beat:
 
SunCoke Energy Inc. SXC with an Earnings ESP of +150.00% and a Zacks Rank #1. The company is likely to release earnings on Apr 27.

TOTAL S.A. TOT has an Earnings ESP of +9.76% and a Zacks Rank #3. The company is anticipated to release earnings on Apr 27.

Phillips 66 Partners L.P. PSXP has an Earnings ESP of +1.85% and a Zacks Rank #2. The partnership is expected to release earnings results on Apr 29.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SCANA CORP (SCG): Free Stock Analysis Report
 
TOTAL FINA SA (TOT): Free Stock Analysis Report
 
SUNCOKE ENERGY (SXC): Free Stock Analysis Report
 
PHILLIPS 66 PTR (PSXP): Free Stock Analysis Report
 
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