Xcel Energy Likely to Beat Earnings - Analyst Blog
May 01 2013 - 7:34AM
Zacks
We expect utility service provider Xcel Energy
Inc. (XEL) to surpass our expectation when it reports
first quarter 2013 results on May 2.
Why a Likely Positive Surprise?
Our proven model shows that Xcel Energy is likely to beat
earnings because it has the right combination of two key
ingredients.
Positive Zacks ESP: Expected Surprise
Prediction or ESP (Read: Zacks Earnings ESP: A Better Method),
which represents the difference between the Most Accurate estimate
and the Zacks Consensus Estimate, is at +4.65%. This is a
meaningful and leading indicator of a likely positive earnings
surprise for shares.
Zacks #2 Rank (Buy): Note that stocks with
Zacks Ranks of #1, #2 and #3 have a significantly higher chance of
beating earnings. The Sell rated stocks (#4 and #5) should never be
considered going into an earnings announcement.
The combination of Xcel Energy’s Zacks Rank #2 (Buy) and +4.65%
ESP makes us confident of an earnings beat on May 2.
What is Driving the Better-than-Expected
Earnings?
Xcel Energy’s high-end midstream projects, disciplined
cost-control initiatives and competitive power rate offerings are
expected to be the key factors triggering a positive earnings
surprise.
Consistent earnings surprises in the last four quarters resulted
in an average beat of 5.79%. Given the positive dynamics we expect
the same trend to continue in the first quarter as well.
The operational start-up of the Bemidji-Grand Rapids
Transmission line under its CapX2020 program will continue to
support Xcel Energy’s growth. Moreover, the company’s aggressive
investments in renewable generation especially wind will bode well
for Xcel Energy given the favorable climate for renewables in the
U.S. currently. With prices below the national average owing to its
technological efficiency, the company is well positioned to reap
gains from the market.
Other Stocks to Consider
Xcel Energy is not the only firm looking up this earnings
season. We also see likely earnings beats coming from these three
industry peers:
Brookfield Infrastructures Partners L.P. (BIP)
has an earnings ESP of +1.19% and carries a Zacks Rank #1 (Strong
Buy).
ALLETE Inc. (ALE) has an earnings ESP of +1.33%
and carries a Zacks Rank #2 (Buy).
Pinnacle West Capital Corporation (PNW) has an
earnings ESP of +200.0% and carries a Zacks Rank #3 (Hold).
ALLETE INC (ALE): Free Stock Analysis Report
BROOKFIELD INFR (BIP): Free Stock Analysis Report
PINNACLE WEST (PNW): Free Stock Analysis Report
XCEL ENERGY INC (XEL): Free Stock Analysis Report
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