We expect diversified utility company TECO Energy, Inc. (TE) to beat expectations when it reports fourth-quarter 2013 results on Jan 30, 2014.
Why a Likely Positive Surprise?
Our proven model shows that TECO Energy is likely to beat earnings because it has the right combination of key factors.
Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.76%. This is meaningful and a leading indicator of a likely positive earnings surprise for this company.
Zacks #3 Rank (Hold): The stocks with Zacks Ranks of #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 TECO Energy’s Zacks Rank #3 (Hold) and +4.76% ESP make us confident of a positive earnings beat on Jan 30.
What is Driving Better-than-Expected Earnings?
In Sep 2013, TECO Energy’s subsidiary Tampa Electric Company received an approval from the Florida Public Service Commission to increase the monthly rates of the residential electricity customers. The regulated utility providers recoup their investments from the customers through the filing of rate hike. The timely sanction of rate-hike request will encourage the utility company to invest more to upgrade its asset base. These initiatives will enable the company to provide uninterrupted services to its customers.
In addition, gradual improvement of economy at the state of Florida including housing market recovery, a decrease in unemployment rate and creation of new jobs will influence the consumers to pay utility bills on time and create opportunities for addition of new customers to its portfolio. These factors will fuel TECO Energy’s future performance.
Other Stocks to Consider
TECO Energy is not the only company looking up this earnings season. We also see likely earnings beat coming from other utility providers.
Wisconsin Energy Corp. (WEC), Earnings ESP of +5.26% and Zacks Rank #2 (Buy).
FirstEnergy Corp. (FE), Earnings ESP of +2.86% and Zacks Rank #3 (Hold).
Xcel Energy Inc. (XEL), Earnings ESP of +3.45% and Zacks Rank #3 (Hold).