DTE Energy Poised to Beat Earnings Again - Analyst Blog

DTE Energy Company DTE will release its first quarter 2014 financial results before the market bell on Apr 25, 2014. This energy company registered a positive earnings surprise last quarter. We expect the company to beat again this quarter.

Why a Likely Positive Surprise?

Our proven model shows that DTE Energy is likely to beat earnings because it has the right combination of two key ingredients. A stock needs to have both a a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This is the case here.

Positive Zacks ESP:  This is because the Most Accurate estimate stands at $1.47 while the Zacks Consensus Estimate is $1.41, resulting in +4.26% ESP. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank #3 (Hold): DTE Energy's Zacks Rank #3 combined with a positive ESP increases the possibility 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?

DTE Energy has been generating stable returns from its regulated electric and gas utilities in Michigan. The improvement in Michigan's economy is driving demand for utility services. This has helped DTE Energy to increase its pool of customers and sustain a solid run.

In addition, operational improvement and cost management have enabled the company to rein in operational and maintenance expenses and spread the benefit to its customers. DTE Energy aims to lower surcharges by $615 million over the 2013-2014 time period, cutting down on customer bills.

Infrastructure investments have helped the company to generate 7% earnings growth since 2008. DTE Energy's Bluestone Pipeline and Millennium Pipeline are functioning full tilt and are contributing to the company's financial results.

To build up from its current position DTE Energy plans to invest $6.7 billion in electric and $1.2 billion in its gas operations over the next five years.

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.

Entergy Corporation ETR has an earnings ESP of +12.00% and carries a Zacks Rank #1 (Strong Buy).

Calpine Corp. CPN has an earnings ESP of +50.00% and carries a Zacks Rank #2 (Buy).

Public Service Enterprise Group Inc. PEG has an earnings ESP of +8.79% and carries a Zacks Rank #2 (Buy).