Breaking News
Investing Pro 0
Cyber Monday Extended SALE: Up to 60% OFF InvestingPro+ CLAIM OFFER

What's in Store for American Electric (AEP) in Q1 Earnings?

By Zacks Investment ResearchStock MarketsMay 03, 2020 11:40PM ET
www.investing.com/analysis/whats-in-store-for-american-electric-aep-in-q1-earnings-200523551
What's in Store for American Electric (AEP) in Q1 Earnings?
By Zacks Investment Research   |  May 03, 2020 11:40PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
AEP
-0.63%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ED
+0.02%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AQN
-1.18%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

American Electric Power Company (NYSE:AEP), Inc. AEP is set to release first-quarter 2020 results on May 6, before market open. In the last reported quarter, the company’s earnings came in line with the Zacks Consensus Estimate.

In the trailing four quarters, American Electric came up with average positive earnings surprise of 5%.

Let’s see how things have shaped up prior to this announcement.

Factors at Play

During the January-March 2020 quarter, some parts of the company's service territories witnessed warmer-than-normal temperatures, while in some other parts temperature remained below normal. Moreover, a few states like Oklahoma, Texas, Arkansas, Tennessee and Louisiana experienced notable storm activities, followed by heavy rainfall.

So, overall, weather conditions seem to have boosted electricity demand in American Electric’s service territory, which, in turn, must have contributed its top-line growth in the soon-to-be-reported quarter.

In December 2019, the Arkansas Public Service Commission (APSC) approved an annual base rate increase of $53 million for American Electric, based upon a 9.45% return on common equity. This favorable rate case outcome is to have boosted the top line.

Moreover, growth in pipeline transportation sector during the first half of the first quarter is likely to have boosted sales from oil and gas industries.

The Zacks Consensus Estimate for American Electric’s first-quarter revenues is pegged at $4.32 billion, indicating a rise of 6.6% from the year-ago quarter figure.

While heavy showers tend to bolster electricity demand, storms before showers cause damages to electricity poles and grids. This many a times pushes up maintenance cost for utility providers.

Considering the fact that in January alone, 396 storms were reported in American Electric’s service areas, its first-quarter results are expected to reflect higher operating and maintenance costs. These costs, in turn, might have weighed on the company’s bottom line in the soon-to-be-reported quarter.

Further, the aforementioned base rate increase, approved by the APSC, also includes increased annual depreciation expense worth $6 billion, which became effective with the first billing cycle in January 2020. This may also have dragged down the company’s quarterly earnings.

The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $1.09 per share, suggesting 8.4% decline from the year-ago quarter reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for American Electric 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. This is not the case here.

Earnings ESP: American Electric has an Earnings ESP of 0.00%. 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are a few players from the Utilities sector that have the right combination of elements to post an earnings beat when they report first-quarter 2020 results.

Consolidated Edison ED has an Earnings ESP of +0.52% and a Zacks Rank #3. The company is set to announce report results on May 7.

NewJersey Resources NJR has an Earnings ESP of +3.86% and a Zacks Rank #3. The company will release earnings on May 8.

Algonquin Power & Utilities (NYSE:AQN) AQN has an Earnings ESP of +1.59% and a Zacks Rank #2. The company is set to announce results on May 7.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Electric Power Company, Inc. (AEP): Free Stock Analysis Report

Consolidated Edison Inc (NYSE:ED): Free Stock Analysis Report

NewJersey Resources Corporation (NJR): Free Stock Analysis Report

Algonquin Power & Utilities Corp. (AQN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research
What's in Store for American Electric (AEP) in Q1 Earnings?
 

Related Articles

What's in Store for American Electric (AEP) in Q1 Earnings?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email