The AES Corporation AES is scheduled to report third-quarter 2015 results before the opening bell on Nov 5. In the last quarter, the company had posted a negative earnings surprise of 19.35%. However, it surpassed the Zacks Consensus Estimate in two out of the past four trailing quarters with an average negative surprise of 1.78%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
AES Corporation continues to witness headwinds from poor hydrology in Brazil. The company expects 2015 earnings to suffer a negative impact of 7 cents per share due to poor hydrology and demand in Brazil. Dry hydrology is leading to high electricity prices by requiring the dispatch of more expensive thermal energy. As a result, AES Corporation expects a 4% year-over-year decline in volume at its Brazilian utilities in 2015.
However, AES Corporation’s systematic share purchase policy has the potential to boost earnings. As of Jun 30, 2015, the company has repurchased 26 million shares for $335 million. It is now left with approximately $88 million under its existing share repurchase authorization at 2015 end.
Earnings Whispers?
Our proven model does not conclusively show that AES Corporation is likely to 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) for this to happen. That is not the case here as you will see below.
Zacks ESP: AES Corporation has a 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 37 cents.
Zacks Rank: AES Corporation’s Zacks Rank #3, when combined with its 0.00% ESP, makes surprise prediction difficult.
We note that Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Ameren Corporation AEE has an Earnings ESP of +1.53% and a Zacks Rank #2. It will report quarterly results on Nov 6.
Duke Energy Corporation DUK has an Earnings ESP of +0.66% and a Zacks Rank #3. It will report quarterly results on Nov 4.
WEC Energy Group, Inc. WEC has an Earnings ESP of +3.39% and a Zacks Rank #3. It will report quarterly results on Nov 4.
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