AES Corporation AES is scheduled to report second-quarter 2015 results before the opening bell on Aug 10. In the last quarter, the company posted a negative earnings surprise of 7.41%. However, it surpassed the Zacks Consensus Estimate in three out of the past four trailing quarters with an average beat of 3.06%.
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 and unfavorable foreign exchange in Latin America and Europe. The company expects that the Brazilian regulator may dispatch less hydro capacity in order to maintain reservoir levels, resulting in an additional 2 to 3 cents per share negative impact on full-year earnings. This brings the total impact to 7 to 8 cents per share in 2015. However, the company will likely register benefit of 1 cent per share from the early completion of the 1,240-MW Mong Duong 2 power plant in Vietnam.
AES Corporation’s systematic share purchase policy will boost earnings. In first-quarter 2015, the company repurchased 3.4 million shares for $42 million. At the end of the second quarter, it had $381 million remaining under the repurchase authorization.
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 of #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 both stand in line at 31 cents.
Zacks Rank: AES Corporation’s Zacks Rank #3, when combined with its 0.00% ESP, makes a 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.
Recent Peer Releases
American Electric Power Co., Inc. AEP reported second-quarter 2015 operating earnings of 88 cents per share, beating the Zacks Consensus Estimate of 81 cents by 8.6%.
Eversource Energy ES reported second-quarter 2015 operating earnings of 66 cents per share, beating the Zacks Consensus Estimate of 56 cents by 17.9%.
WEC Energy Group WEC reported second-quarter 2015 adjusted earnings of 59 cents per share, beating the Zacks Consensus Estimate of 55 cents by 7.3%.
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