NiSource Inc. (NI) will release its fourth-quarter 2014 financial results before the market opens on Feb 18, 2015. In the prior quarter, this utility reported a negative earnings surprise of 12.50%. NiSource currently has a Zacks Rank #4 (Sell). Let’s see how things are shaping up for this announcement.
Factors Affecting this Quarter
NiSource’s operating expenses have increased over the first nine months of 2014. Operating and maintenance expenses are expected to remain high in the final quarter of 2014 as well.
Like other energy companies in this space, NiSource too has taken the initiative to form a Natural Gas Pipeline, Midstream & Storage Master Limited Partnership (“MLP”) during the second half of 2014. The MLP formation will help to generate funds for the expansion of pipeline projects. In Dec 2014, NiSource finalized new credit facilities, worth $3.5 billion, which will help the company meet post-separation expenses.
Earnings Whispers?
Our proven model does not conclusively show that NiSource will beat earnings this quarter. 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) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: This is because the Most Accurate estimate stands at 52 cents per share, compared with the Zacks Consensus Estimate of 51 cents, resulting in a +1.96% ESP.
Zacks Rank: NiSource’s Zacks Rank #4 complicates the forecasting power of the positive ESP.
As it is, 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 utility companies worth considering as our model shows they have the right combination of elements to post an earnings beat this quarter.
PNM Resources, Inc. (PNM) has an earnings ESP of +8.70% and a Zacks Rank #2.
Edison International (EIX) has an earnings ESP of +6.02% and a Zacks Rank #2.
Ameren Corporation (AEE) has an earnings ESP of +7.14% and a Zacks Rank #3. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AMEREN CORP (AEE): Free Stock Analysis Report NISOURCE INC (NI): Free Stock Analysis Report EDISON INTL (EIX): Free Stock Analysis Report PNM RESOURCES (PNM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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