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What's in Store for Consolidated Edison (ED) in Q3 Earnings?

Consolidated Edison, Inc. ED is set to report third-quarter 2017 results on Nov 2, after the closing bell.

Last quarter, the company posted a negative earnings surprise of 4.92%. However, the company surpassed the Zacks Consensus Estimate in three of the past four quarters, with an average earnings beat of 1.37%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

Consolidated Edison has been investing to enhance its renewable generation assets of late. During second-quarter 2017, the company’s renewable energy production volumes improved a 46.1%, leading to an increase of $36 million in renewable revenues.

The company in August announced that its installation plans of solar panels on company roofs and grounds have been approved. Under the initial phase of this strategy, Consolidated Edison expects to generate 3 megawatts of power through the installation that will serve 800 to 1,600 customers, primarily in Brooklyn, Queens and Westchester County.

The upcoming third-quarter’s results are expected to benefit from this initiative. Also further updates on progress of the same are expected to come when the company reports its quarterly numbers.

Moreover, the company's service territories witnessed warmer-than-normal temperatures during the quarter. This will result in higher household expenditure on cooling and, in turn, will most likely boost revenues for this energy provider.

However, the company faces interest rate risk owing to variable rate debt and to new debt financing needed to fund capital requirements, including the construction expenditures of the Utilities and maturing debt securities. Management estimates that as of Jun 30, 2017, the company witnessed a 10% increase in interest rates due to its variable rate debt. This will result in an increase in annual interest expense of $3 million. We expect the upcoming result to reflect a portion of this interest expense, which might put pressure on its earnings.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings reflects a rise of 0.7% year over year, whereas sales are anticipated to drop 7.8% to $3.14 billion.

Earnings Whisper

Our proven model does not show that Consolidated Edison will beat earnings this quarter. Notably, 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. Consolidated Edisonlacks these attributes, as mentioned below:

Zacks ESP: Consolidated Edison has an Earnings ESP of -0.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Consolidated Edison currently carries a Zacks Rank #3, which along with a negative earnings ESP makes surprise prediction difficult.

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

Consolidated Edison Inc Price and EPS Surprise

 

Consolidated Edison Inc Price and EPS Surprise | Consolidated Edison Inc Quote

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 next quarterly results on Nov 1. The company has an Earnings ESP of +7.84% 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 +3.99% and a Zacks Rank #3. The company is scheduled to report next quarterly results on Nov 1.

Avista Corporation AVA has an Earnings ESP of +2.63% and a Zacks Rank #3. The company is slated to release next quarterly results on Nov 1.

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NiSource, Inc (NI): Free Stock Analysis Report
 
Consolidated Edison Inc (ED): Free Stock Analysis Report
 
El Paso Electric Company (EE): Free Stock Analysis Report
 
Avista Corporation (AVA): Free Stock Analysis Report
 
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