New York-based Consolidated Edison, Inc. ED is set to release second-quarter 2015 results after the closing bell on Aug 6, 2015. 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 6.84% earnings surprise. Let’s 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. This 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 +1.56%. This is because the Most Accurate Estimate is at 65 cents per share, a penny higher than the Zacks Consensus Estimate of 64 cents per share.
Zacks Rank: Consolidated Edison currently has a Zacks Rank #3. The combination of Consolidated Edison’s Zacks Rank #3 and +1.56% ESP indicates a likely earnings beat this quarter.
Note that stocks with a 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’s regulated utilities provide it with a stable earnings base. These utilities offer transmission and distribution services with limited commodity exposure as most electric and gas supply costs are passed on to customers. The company reported positive earnings surprises in the trailing four quarters, with an average beat of 7.93%.
Consolidated Edison continues to focus on expanding its renewable assets. Con Edison Development, a subsidiary of Consolidated Edison, acquired six shovel-ready solar photovoltaic projects with a total capacity of 140 megawatt direct current (“MWDC”). Located in Tulare, Kings and Fresno counties, the solar projects range from 20 MWDC to 25 MWDC. These projects have a capacity of providing electricity to nearly 25,000 homes. These initiatives will accelerate the growth process of the company.
Stock to Consider
Here is another utility worth considering as our model shows that this stock has the right combination of elements to post an earnings beat this quarter.
Chesapeake Utilities Corporation CPK has an earnings ESP of +2.63% and a Zacks Rank #3.
Peer Releases
Here are some stocks in the electric utility space which posted an earnings beat in the second quarter.
FirstEnergy Corp. FE reported second-quarter 2015 operating earnings of 53 cents per share, outpacing the Zacks Consensus Estimate by 10.4%
NextEra Energy, Inc. NEE announced second-quarter 2015 adjusted earnings of $1.56 per share, beating the Zacks Consensus Estimate of $1.50 by 4%.
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