We expect Wisconsin Energy Corporation (WEC) to beat expectations when it reports fourth-quarter 2014 results before the opening bell on Feb 11. Last quarter, the company posted an 11.76% positive surprise. Let’s see how things are shaping up for this announcement.
What is Driving the Better-than-Expected Earnings?
Wisconsin Energy has added new customers to its portfolio over the last several quarters, primarily on the back of steady economic improvement in its service territories. Particularly, decline in unemployment rate and shift to natural gas from propane are expected to boost the company’s future performance.
Wisconsin Energy’s systematic investments in upgrading its electricity and natural gas distribution systems, while strengthening existing infrastructure and converting coal-based units to natural gas are appreciable. The company plans to invest $6.5–$7.1 billion between 2014 and 2023. These initiatives will support Wisconsin Energy’s long-term business strategy, and improve both its customer base and service reliability.
Why a Likely Positive Surprise?
Our proven model shows that Wisconsin Energy is likely to beat earnings because it has the right combination of the key factors.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.75%. This is a meaningful and leading indicator of a likely positive earnings surprise for a company.
Zacks Rank: Wisconsin Energy is a Zacks Rank #2 (Buy) stock. Stocks with Zacks Ranks #1 (Strong Buy), 2 and 3 (Hold) have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Wisconsin Energy’s Zacks Rank #2 and +1.75% ESP makes us confident of an earnings beat when it reports results on Feb 11.
Other Stocks to Consider
Here are some other stocks in the same sector that you may want to consider as our model shows that these also have the right combination of elements to beat earnings this season:
PNM Resources, Inc. (PNM) has an earnings ESP of +8.70% and carries a Zacks Rank #2.
NiSource Inc. (NI) has an earnings ESP of +1.96% and carries a Zacks Rank #3.
OGE Energy Corp. (OGE) has an earnings ESP of +11.11% and carries a Zacks Rank #3.
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