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Will American Electric Power (AEP) Miss on Q4 Earnings? - Analyst Blog

Zacks Equity Research
Updated

American Electric Power Co., Inc. (AEP) will release its fourth quarter 2014 financial results before the market opens on Jan 28, 2015. In the prior quarter, this utility reported a negative earnings surprise of 1.94%. American Electric Power currently has a Zacks Rank #3 (Hold). Let’s see how things are shaping up at American Electric Power prior to this announcement.

Factors to Consider this Quarter

American Electric Power saw declining residential electric demand in the second and third quarters of 2014. The trend is not likely to reverse in the fourth quarter given the mild temperatures.

American Electric Power’s strong financial position enabled it to increase the quarterly dividend rate by 6% from the previous payout of 50 cents to 53 cents. American Electric Power has paid dividends to its shareholders in every quarter since Jul 1910.

Earnings Whispers

Our proven model does not conclusively show that American Electric Power is likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here.

Zacks ESP:  This is because the Most Accurate estimate stands at 52 cents per share, in line with the Zacks Consensus Estimate, resulting in a 0.00% ESP.

Zacks Rank #3 (Hold): American Electric Power’s Zacks Rank #3 combined with a 0.00% ESP makes an earnings prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some 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.

Consolidated Edison, Inc. (ED) has an earnings ESP of +1.79% and carries a Zacks Rank #2 (Buy).

PNM Resources, Inc. (PNM) has an earnings ESP of +8.70% and carries a Zacks Rank #2 (Buy).

Wisconsin Energy Corp. (WEC) has an earnings ESP of +1.75% and carries a Zacks Rank #2 (Buy).


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AMER ELEC PWR (AEP): Free Stock Analysis Report
 
WISC ENERGY CP (WEC): Free Stock Analysis Report
 
CONSOL EDISON (ED): Free Stock Analysis Report
 
PNM RESOURCES (PNM): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research