Public Service Enterprise (PEG): Earnings Preview For Q2

Public Service Enterprise Group Inc. (NYSE:PEG) is expected to release second-quarter 2016 financial results on Jul 29. Last quarter, this diversified utility came out with a positive earnings surprise of 7.27%. Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider

The unexpected extension of a refueling outage at its Salem 1 nuclear power plant in the second quarter will result in lower-than-expected electricity production. This could also have an adverse impact on the company’s top line.

However, economic conditions have continued to improve in Public Service Enterprise’s service territory, which is going to have a positive impact on earnings this quarter.

Weather too will play an important role during the second quarter. With temperatures in the second quarter marginally higher than normal, it might also have a positive impact on demand.

Earnings Whispers

Our proven model does not conclusively show that Public Service Enterprise Group is likely to beat estimates 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. But, that is not the case here as you will see below.

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are pegged at 57 cents, resulting in an Earnings ESP of 0.00%.

Zacks Rank: Though Public Service Enterprise Group’s Zacks Rank #3 increases the predictive power of the ESP, its 0.00% ESP makes a beat unlikely this quarter.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks in the utility space worth considering as our model shows that thy have the right combination of elements to beat estimates this quarter:

Pattern Energy Group Inc. (NYSE:PEG) has an Earnings ESP of +100.0% and a Zacks Rank #2. It is scheduled to report earnings on Aug 8.

UGI Corporation (NYSE:UGI) has an Earnings ESP of +50.0% and a Zacks Rank #2. It is expected to report third-quarter fiscal 2016 results after the market closes on Aug 1.

WEC Energy Group (NYSE:WEC) has an Earnings ESP of +1.82% and a Zacks Rank #3. It is scheduled to report earnings on Jul 27.

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