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AES Corp (AES) to Post Q2 Earnings: What's in the Cards?

Zacks Equity Research

The AES Corporation AES is set to release second-quarter 2019 results on Aug 6, before the opening bell.
 
In the last reported quarter, the company witnessed a negative earnings surprise of 6.67%. However, it surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average positive surprise being 3.10%.
 
Let’s see how things are shaping up prior to this announcement.

Factors at Play

During the first-quarter earnings call, AES Corp announced the launch of its additional $100-million annual cost-savings program. This initiative will further strengthen the company’s objective to effectively manage costs, which will likely be reflected by the upcoming quarterly results.

Additionally, the company has been witnessing lower interest expenses over the last few quarters. We expect the trend to continue in the to-be-reported quarter, which in turn may favorably impact the company’s bottom line.

The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at 27 cents, indicating a rise of 8% from the year-ago quarter’s reported figure.

During the second quarter of 2019, majority of AES Corp’s service territories in the United States witnessed severe weather conditions, characterized by severe storms and tornadoes. As a result, this may have led to prolonged electricity outages, thereby disrupting the smooth supply of power. This, in turn, is also likely to unfavorably impact the company's overall revenues in the to-be-reported quarter.

The Zacks Consensus Estimate for the company’s second-quarter sales is pegged at $2.5 billion, implying a year-over-year decline of 1.1%.

What the Zacks Model Unveils

Our proven model does not conclusively show that AES Corp is likely to beat estimates in the second quarter. This 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 and that is not the case here.

Earnings ESP: AES Corp has an Earnings ESP of -4.94%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: AES Corp currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Please 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.

The AES Corporation Price and EPS Surprise

The AES Corporation Price and EPS Surprise
The AES Corporation Price and EPS Surprise

The AES Corporation price-eps-surprise | The AES Corporation Quote

Stocks to Consider

Here are a few players from the Utilities sector that have the right combination of elements to post an earnings beat this quarter.

PPL Corporation PPL has an Earnings ESP of +1.18% and a Zacks Rank #3. The company is expected to release second-quarter results around Aug 6.

Black Hills Corporation BKH is scheduled to release second-quarter results on Aug 5. It has an Earnings ESP of +0.75% and a Zacks Rank of 3.

A Recent Utility Release

CMS Energy Corporation CMS reported second-quarter 2019 adjusted earnings per share of 33 cents, down 32.7% year over year. The bottom line also missed the Zacks Consensus Estimate of 44 cents by 25%.

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Black Hills Corporation (BKH) : Free Stock Analysis Report
 
The AES Corporation (AES) : Free Stock Analysis Report
 
PPL Corporation (PPL) : Free Stock Analysis Report
 
CMS Energy Corporation (CMS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research