PG&E Corp (PCG) Q3 Earnings: What's Ahead For The Stock?

Utility company PG&E Corporation (NYSE:PCG) is set to release third-quarter 2016 results on Nov 4, before the opening bell. In the preceding quarter, the company delivered a negative earnings surprise of 29.79%. Let’s see how things are shaping up for this announcement.

Factors at Play

PG&E Corporation continues to make systematic investments in gas-related projects and electric system safety and reliability. Also, consistent and steady growth in customer count should bolster the company’s top line.

During the second-quarter earnings call, PG&E Corporation said that in the company has received phase 1 approval for the gas transmission rate case, which will allow it to start billing customers on an incremental rate starting Aug 1. This rate increase should boost the company’s top line during the to-be-reported quarter.

Moreover, the company's service territories witnessed above-average temperatures during the third quarter. In fact, California recorded hottest temperatures in August. This should translate into increased electric sales in these regions, which in turn, will boost the top line.

Earnings Whispers

Our proven model does not conclusively show that PG&E Corporation will be able to pull a surprise 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 an earnings beat. But that is not the case here as you will see below.

Zacks ESP: PG&E Corporation has an Earnings ESP of -1.71%. This is because the Most Accurate estimate stands at $1.15, while the Zacks Consensus Estimate is pegged at $1.17.

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Though PG&E Corporation’s Zacks Rank #3 increases the predictive power of ESP, its negative Earnings ESP makes surprise prediction difficult.

We note that Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the sector you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Pattern Energy Group Inc. (NASDAQ:PEGI) is scheduled to release third-quarter results on Nov 7. The company has an Earnings ESP of +9.09% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AES Corporation (NYSE:AES) has an Earnings ESP of +3.13% and a Zacks Rank #3. It is expected to report earnings on Nov 4.

Duke Energy Corporation (NYSE:DUK) has an Earnings ESP of +1.28% and a Zacks Rank #3. The company is expected to release third-quarter 2016 earnings on Nov 4.

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