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Public Service Enterprise (PEG) Q3 Earnings: What's in Store?

Public Service Enterprise Group Inc. PEG is scheduled to report third-quarter 2017 results on Oct 31, before the opening bell.

Last quarter, the utility’s earnings surpassed the Zacks Consensus Estimate by 8.77%. Moreover, Public Service Enterprise outperformed the same in the trailing four quarters with an average of 7.70%.

Let’s see how things are shaping up for this announcement.

Factors at Play

During the second-quarter earnings call, Public Service Enterprise announced that its key subsidiary, PSEG Power’s adjusted earnings is benefiting from the ongoing programs to reduce operating expenses. We expect the company to reflect similar results when it will release its third-quarter earnings..

Additionally, the unemployment rate in Public Service Enterprise’s service territories is better than the national average. An improving economy is likely to the utility demand in the state, thereby improving the company’s quarterly performance.

On the flip side,management earlier declared that the energy market has been adversely impacted by lower demand and excess capacity, which in turn has hurt the return of base load resources, as the average price on energy hedges decline. If the trend persists it might hamper Public Service Enterprise’s results.

Overall, for the third quarter, the Zacks Consensus Estimate for earnings reflects year-over-year decline of 5%, while revenues are pegged at $2.54 billion depicting an increase of 3.9%.

Earnings Whispers

Our proven model does not show that Public Service Enterprise is likely to 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. But that is not the case here, as you will see below.

Zacks ESP: Public Service Enterprise has an Earnings ESP of -0.72%. This is because the Most Accurate estimate is 83 cents, lower than the Zacks Consensus Estimate of 84 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Public Service Enterprise’s Zacks Rank #2 increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are a few utility stocks which have the right combination of elements to post an earnings beat this quarter:

NiSource, Inc. NI will report third-quarter results on Nov 1. The company has an Earnings ESP of +7.69% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

El Paso Electric Company EE has an Earnings ESP of +12.99% and a Zacks Rank #3. The company is scheduled to report third-quarter results on Nov 1.

Avista Corporation AVA has an Earnings ESP of +17.24% and a Zacks Rank #3. The company is slated to release third-quarter results on Nov 1.

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