Will Public Service Enterprise Group (PEG) Beat Earnings? - Analyst Blog

We expect Public Service Enterprise Group Inc. PEG to beat expectations when it reports first-quarter 2014 financial results on May 1. Last quarter, the company registered a positive earnings surprise of 4.26%.

Earnings Whispers

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

Positive Zacks ESP: Public Service Enterprise has a Zacks ESP of +7.61%. This is because the Most Accurate estimate stands at 99 cents per share while the Zacks Consensus Estimate is 92 cents. This is a significant and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #2 (Buy): We note that stocks with Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Public Service Enterprise's Zacks Rank #2 (Buy) and +7.61% ESP makes us confident of a possible earnings beat on May 1. In fact, Public Service Enterprise delivered positive earnings surprises in the last four quarters with an average beat of 7.82%.

What is Driving the Better-than-Expected Earnings?

Public Service Enterprise operates as an energy company primarily in the Northeastern and Mid-Atlantic United States. The company expects to generate strong earnings mainly due to higher demand in its service territories on the back of a severe winter.

The company is also optimistic about a recovering Northeastern economy. This will not only lead to lower unemployment rates but also increasing demand for utility services. All these will boost the revenues of the company.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements, i.e., a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3.

NRG Yield, Inc. NYLD has an Earnings ESP of +23.53 % and holds a Zacks Rank #1 (Strong Buy).

Alliant Energy Corp. LNT has an Earnings ESP of +1.30 % and holds a Zacks Rank #2 (Buy).

Calpine Corp. CPN has an Earnings ESP of +28.57 % and holds a Zacks Rank #2 (Buy).