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What's in Store for American Electric's (AEP) Q3 Earnings?

American Electric (AEP) Q3 results are likely to reflect positive impact from economic recovery and rate increase across its service territories.

This story originally appeared on Zacks

American Electric Power Company, Inc AEP is slated to release its third-quarter 2021 results on Oct 28, 2021, before the opening bell.

- Zacks

In the last reported quarter, the company delivered an earnings surprise of 3.51%. American Electric has a trailing four-quarter earnings surprise of 1.96%, on average.

Factors to Note

During most part of the third quarter, the company’s service territories witnessed mixed weather patterns. While some parts observed cooler than normal temperatures, other parts had abnormally dry weather conditions. Furthermore, some parts of its service territories experienced significant precipitation levels throughout the quarter, resulting in wet weather conditions.This is likely to have moderately impacted the company’s overall revenues in the to-be-reported quarter.

The positive impact from favorable rate changes across multiple jurisdictions, increased transmission revenues and higher off-system sales are likely to have boosted the third-quarter performance.

With the U.S. economy gradually recovering over the past couple of quarters, increased residential load, and improved industrial and commercial load might have favorably contributed to the company’s performance in the quarter to be reported.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $4.43 billion, suggesting growth of 8.1% from the year-ago quarter.

However, American Electric’s service area,particularly the states of Texas, Louisiana and Arkansas, experienced severe weather patterns, including tornedos,in the third quarter. Such severe weather conditions result in damage to the electric poles and infrastructure of utility providers like American Electric. This might have pushed up the company’s operating expenses for restoration and repairing, which is likely to have weighed on its bottom line in the to-be-reported quarter.

The company continues to manage its cost diligently. Such cost management initiativesmay have partially offset the unfavorable impacts of the aforementioned expenses. This, in turn,may have aided the company’s performance in the third quarter.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.44 per share, indicating a decline of 2% from the prior-year reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for American Electric this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: American Electric currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are three Utilities players you may want to consider, as these have the right combination of elements to post an earnings beat this season:

AES CorporationAES has an Earnings ESP of +3.53% and a Zacks Rank #3.

Avangrid, IncAGR has an Earnings ESP of +2.82% and a Zacks Rank #3.

Edison InternationalEIX has an Earnings ESP of +1.46% and a Zacks Rank #3.

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Edison International (EIX): Free Stock Analysis Report


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