American Electric (AEP) To Report Q3 Earnings: Will It Beat?

American Electric Power Company, Inc. (NYSE:AEP) is set to release third-quarter 2019 results on Oct 24, before the market opens. In the trailing four quarters, the company came up with average positive earnings surprise of 2.96%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

For the most part of third-quarter 2019, the majority of the company's service territories witnessed warmer-than-normal temperatures. Such above-average temperature is likely to have boosted electricity demand in American Electric’s service territory, which, in turn, might have bolstered its top line.

The company has also been experiencing favorable rate case outcomes trend for the past couple of years. In July, the company received a settlement approval that must have boosted its top line by $11 million.

Management had projected industrial sales in the oil and gas sector to grow during the third quarter, based on a number of new projects slated to come online. Anticipating these projects have come online, we expect the upcoming results to reflect higher industrial sales for the company.

The Zacks Consensus Estimate for American Electric’s third-quarter revenues is pegged at $4.86 billion, indicating a rise of 12.9% from the year-ago quarter’s reported figure.

However, in the third quarter, some extensive parts of the company’s territories experienced thunderstorms and tornados. These may have damaged the company’s grids and power lines, thereby pushing up its infrastructural costs for restoring smooth flow of electricity. This, in turn, may have weighed on the company’s bottom line in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $1.24, suggesting 0.8% drop from the year-ago quarter’s reported figure.

What the Zacks Model Says

Our proven model predicts that American Electric is likely to beat on earnings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: American Electric has an Earnings ESP of +10.26%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Key Picks

Here are a few other companies from the Utilities sector that have the right combination of elements to post an earnings beat this quarter.

Entergy Corporation (NYSE:ETR) has an Earnings ESP of +7.14% and a Zacks Rank #3. The company is expected to release third-quarter 2019 results on Oct 30.

AES Corp. (NYSE:AES) has an Earnings ESP of +2.50% and a Zacks Rank #3. The company is expected to release third-quarter 2019 results on Nov 6.

Public Service Enterprise Group Inc. (NYSE:PEG) has an Earnings ESP of +1.03% and a Zacks Rank #3. The company is scheduled to release third-quarter results on Oct 31.

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