Electric utility provider, DTE Energy Company (DTE) is scheduled to report third-quarter 2014 results before the opening bell on Oct 24.
Last quarter, DTE Energy posted a negative earnings surprise of 5.19%. On an average, the company has posted a 2.48% positive surprise in the last four quarters. Let’s see how things are shaping up for the third quarter.
Factors Influencing this Quarter
In the third quarter, Detroit, MI-based, DTE Energy commenced commercial operation in its Echo Wind Park. The project added 112 megawatts (MW) to the company's renewable energy portfolio. Also, DTE Energy selected 84 new solar energy projects to add to the Phase 2 of its SolarCurrents customer-owned pilot program.
The company’s focus on expanding and upgrading its existing electricity and gas utility as well as gas storage and pipeline operations are the driving factors for the quarter. DTE Energy’s diversification initiative into renewables will also help it to achieve regulatory compliance. However, pending decision on rate cases and imposition of various environmental laws may adversely affect the company’s bottom line.
Earnings Whispers?
Our proven model does not conclusively show that DTE Energy will beat earnings 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) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -0.90%. This is because the Most Accurate Estimate is at $1.10 per share while the Zacks Consensus Estimate is at $1.11 per share.
Zacks Rank: DTE Energy’s Zacks Rank #4 (Sell) when combined with a -0.90% ESP makes an earnings beat highly unlikely.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks in the utility industry you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Consolidated Edison, Inc. (ED) has an earnings ESP of +2.80% and a Zacks Rank #2 (Buy).
The Empire District Electric Company (EDE) has an earnings ESP of +8.89% and a Zacks Rank #2 (Buy).
American Electric Power Co., Inc. (AEP) has an earnings ESP of +0.97% and a Zacks Rank #2 (Buy).
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