Energy services holding company, Sempra Energy SRE is expected to beat expectations when it reports second-quarter 2015 earnings results before the opening bell on Aug 4, 2015.
Last quarter, Sempra Energy had recorded a 22.14% positive earnings surprise. Let’s see how things are shaping up for the second quarter.
Factors at Play
In the second quarter, Sempra’s unit – Sempra U.S. Gas & Power – bought the Black Oak Getty wind project in Minnesota from Geronimo Energy, LLC, a utility-scale wind and solar energy developer. The SoCalGas unit teamed up with the Energy Department's National Renewable Energy Laboratory and the National Fuel Cell Research Center to launch demonstration projects to create and test a carbon-free, power-to-gas system for the first time ever in the U.S.
The focus on renewable expansion, particularly solar and wind, will help Sempra Energy to deliver emission-free power to its customers, meet environmental mandates as well as diversify its generation fleet.
The company also recently revealed its plans to form a master limited partnership or MLP, to be called Sempra Partners LP. This will provide steady, long-term revenue streams and dividends, while also enjoying tax advantages.
Why a Likely Positive Surprise?
Our proven model shows that Sempra Energy is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +2.11%. This is because the Most Accurate estimate of 97 cents per share is higher than the Zacks Consensus Estimate of 95 cents. This is a meaningful indicator of a likely positive earnings surprise for the shares.
Zacks Rank: Sempra Energy currently carries a Zacks Rank #3 (Hold). The combination of Sempra Energy’s Zacks Rank #3 and +2.11% ESP makes us positive of a likely earnings beat this season.
The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Other Stocks to Consider
Sempra Energy is not the only stock looking up this earnings season. We also see likely earnings beat coming from these three utility peers.
NRG Energy, Inc. NRG has an earnings ESP of +40.00% and a Zacks Rank #3 (Hold).
UIL Holdings Corporation UIL has an earnings ESP of +7.14% and a Zacks Rank #3.
Consolidated Edison, Inc. ED has an earnings ESP of +1.56% and a Zacks Rank #3.
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