What's in Store for These 4 Utilities This Earnings Season?

Core Viewpoint - The Zacks Utilities sector is expected to report a 6% year-over-year increase in second-quarter 2024 earnings, driven by planned investments, cost-saving initiatives, new electric and gas rates, and the adoption of new technologies to enhance service reliability [11]. Group 1: Earnings Expectations - Companies such as CMS Energy Corporation, Edison International, DTE Energy, and PG&E Corporation are set to report second-quarter earnings on July 25, providing insights into the utilities sector's performance [2]. - The Zacks model indicates that a positive Earnings ESP and a Zacks Rank of 3 or better are essential for increasing the odds of an earnings beat [6]. - CMS Energy is predicted to achieve an earnings beat with an Earnings ESP of +0.39% and a Zacks Rank of 2 [7]. - Edison International is also expected to report an earnings beat with an Earnings ESP of +0.66% and a Zacks Rank of 2 [15]. - DTE Energy's earnings outlook is less favorable, with an Earnings ESP of +2.81% and a Zacks Rank of 4 [16]. - PG&E Corporation's earnings are anticipated to benefit from reduced non-fuel operation and maintenance expenses, alongside rising demand from electric vehicles (EVs) and data centers [10]. Group 2: Operational Improvements - Utilities are making prudent capital expenditures that lower operating, fuel, and maintenance costs, benefiting customers through reduced utility expenses [3]. - The sector is focused on enhancing infrastructure resilience against extreme weather and transitioning to cost-effective renewable energy sources [12]. - Investments in digital technology and data-driven decision-making are improving overall operations and efficiency [3]. Group 3: Market Conditions - Warmer-than-normal weather during the second quarter is expected to positively impact utilities' performance [5]. - The high interest rate environment in the U.S. has not worsened for capital-intensive utility operators, as the Federal Reserve has not increased the benchmark rate since July 2023 [13]. Group 4: Clean Energy Initiatives - Many utility companies are committed to achieving 100% clean energy and zero-emission targets, reducing reliance on coal and increasing the use of renewable energy sources [4]. - Utilities are building large battery storage units to support renewable energy projects, ensuring electricity availability even during non-productive hours [12].