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MARKETS LIVE BLOG:

STOCKS EXTEND GAINS AS RESULTS SEASON KICKS INTO HIGH GEAR

Tech-focused investors prepare for fresh wave of earnings highlighted by struggling Tesla

Can American Electric Power (AEP) Beat Earnings in Q1? - Analyst Blog

Zacks Equity Research
Updated

American Electric Power Co., Inc. AEP will release first-quarter 2015 earnings results before the market opens on Apr 23, 2015. Though the utility reported a negative earnings surprise of 7.69% in the last quarter, we expect it to beat expectation this quarter.

Why a Likely Positive Surprise?

Our proven model shows that American Electric Power is likely to beat earnings because it has the right combination of two key ingredients. 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 the case here.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +0.90%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank: The combination of American Electric Power’s Zacks Rank #3 and +0.90% ESP makes us confident of an earnings beat.

The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

What is Driving the Better Than Expected Earnings?

The improvement in economic conditions of American Electric Power’s service territories is acting as a tailwind for the company. The company expects balanced growth in all major customer classes to further boost demand.

American Electric Power expects to improve its 2015 earnings per share by 4% to 6% from 2014 levels, mainly on its focus on regulated operations and cost discipline. Consistent investments made by the company to strengthen its transmission infrastructure are likely to add nearly 7 cents per share to earnings in 2015.

Other Stocks to Consider

Here are some other companies tied to the Electric utility industry worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter.

TECO Energy, Inc. TE has an earnings ESP of +3.70% and carries a Zacks Rank #2.

Exelon Corporation EXC has an earnings ESP of +1.54% and carries a Zacks Rank #3.

Edison International EIX has an earnings ESP of +1.27% and carries a Zacks Rank #3.


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TECO ENERGY (TE): Free Stock Analysis Report
 
AMER ELEC PWR (AEP): Free Stock Analysis Report
 
EXELON CORP (EXC): Free Stock Analysis Report
 
EDISON INTL (EIX): Free Stock Analysis Report
 
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Zacks Investment Research