Consolidated Edison, Inc. (ED) is set to release its third-quarter 2014 results after the closing bell on Thursday, Nov 6. We expect the company to beat expectations when it reports its earnings results on the day.
In the preceding quarter, Consolidated Edison had delivered a positive 18.52% earnings surprise. Also, the company has maintained an average positive earnings surprise of 10.03% over the past four quarters. Let us see how things are shaping up prior to this announcement.
Why a Likely Positive Surprise?
Our proven model indicates that Consolidated Edison 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 the case here as you will see below.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.80%. This is because the Most Accurate Estimate is at $1.47 per share while the Zacks Consensus Estimate is at $1.43 per share.
Zacks Rank: Consolidated Edison currently has a Zacks Rank #2. The combination of Consolidated Edison’s Zacks Rank #2 and +2.80% ESP makes us confident of an earnings beat this quarter.
Note that stocks with Zacks Rank #1, 2 and 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
What's Driving the Better-than-Expected Earnings?
Consolidated Edison has a stable portfolio consisting of regulated utilities. It makes constant efforts to improve the efficiency of its operations through expansion and infrastructure development. Moreover, it is now shifting its focus on solar projects to expand its renewable portfolio in light of the stringent environment regulations. This will not only enable diversification of the company’s generation mix, but also add to its revenue stream.
The company continues to make solid progress on its solar ventures namely, the 20-megawatt (MW) White River 2 and Corcoran 2 facilities in the third quarter. Moreover, the company has raised its 2014 capital expenditure projection for its competitive energy business to around 93% in light of increased investments in renewables. These initiatives will accelerate the growth process of the company.
Stocks to Consider
Consolidated Edison is not the only firm looking up this earnings season. We also see likely earnings beats coming from these industry peers:
Duke Energy Corp. (DUK) has an Earnings ESP of +0.66% and a Zacks Rank #3.
Dynegy Inc. (DYN) has an Earnings ESP of +260.00% and a Zacks Rank #3.
NRG Yield, Inc. (NYLD) has an Earnings ESP of +75.44% and a Zacks Rank #1.
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