Is a Beat in Store for American Electric (AEP) Q3 Earnings?

American Electric Power Company, Inc. AEP is set to release third-quarter 2018 results on Oct 25, before market opens. Last quarter, this electric utility company reported a positive earnings surprise of 14.77%.

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

Why a Likely Positive Earnings Surprise

Our proven model shows an earnings beat for American Electric 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. This is perfectly the case here as you will see below.

Earnings ESP: American Electric has an Earnings ESP of +2.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company sports a Zacks Rank #1, which when combined with a positive Earnings ESP makes us confident of a probable earnings beat.

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.

American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. Price and EPS Surprise | American Electric Power Company, Inc. Quote

Factors at Play

In the second quarter of 2018, income growth within the company’s service territory was 4.6% higher than the rest of the United States, while unemployment rates in this territory were low and anticipated to fall further. Such steady economic development trends, which are expected to continue in the to-be-reported quarter, hint at an improved purchasing power along with possible residential sales growth for American Electric.

In line with this, the Zacks Consensus Estimate for American Electric’s revenues pegged at $4.34 billion reflects an annual rise of 5.7% in the third quarter.

On the bottom-line front, favorable rate case outcomes along with lower tax rates are expected to boost the company’s third-quarter earnings. Evidently, the Zacks Consensus Estimate for the company’s third-quarter earnings pegged at $1.23 reflects 11.8% annual improvement.

Stocks to Consider

Here are a few operators in the Utilities sector you may consider as our model shows that these have the right combination of elements to deliver an earnings beat this quarter:

CMS Energy CMS has an Earnings ESP of +2.11% and a Zacks Rank #2. The company is scheduled to report third-quarter results on Oct 25. You can see the complete list of today’s Zacks #1 Rank stocks here.

CenterPoint Energy CNP has an Earnings ESP of +1.01% and a Zacks Rank #3. The company is scheduled to report third-quarter results on Nov 8.

Ameren Corporation AEE has an Earnings ESP of +8.65% and a Zacks Rank #1. The company is scheduled to report third-quarter results on Oct 31.

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