Published on 26 Feb 2024 on Zacks via Yahoo Finance
Utility Stocks Reporting Q4 Earnings on Feb 27: AEP, SRE & PNW
The Zacks Utilities sector’s fourth-quarter 2023 earnings are expected to have been driven by planned investments to further improve its operations, cost-saving initiatives and usage of new technologies that helped in increasing the reliability of its services and lowering operating and maintenance expenses.Per the latest Earnings Preview, the Zacks Utilities sector’s fourth-quarter earnings are expected to have increased 15.3% year over year on a decline of 4.7% in revenues. The utilities might have been affected due to warmer-than-normal weather patterns in most of the fourth quarter. However, new utility rates implemented in the service territories and customer growth are likely to have boosted profits.
Factors to Consider
Utilities continue to make prudent capital expenditures that reduce operating, fuel, maintenance and upkeep expenses. As a result, customers benefit from saving money on their utility costs. Utilities have reduced costs while simultaneously improving overall operations and efficiency through digital technology investments, crucial system connections and data-driven decision-making.Various positive aspects, such as new electric tariffs, customer additions, cost control and the execution of energy-efficiency initiatives, continue to benefit utilities. Also, the ongoing investments to further improve the resiliency of electric infrastructure against extreme weather conditions and the transition to cost-effective, renewable energy sources to produce electricity are expected to have benefited the power industry.Most of the utility companies have pledged to deliver 100% clean energy and achieve the zero-emission target in the coming years. As a result, these companies have been reducing their use of coal and other polluting sources in their generating portfolios and increasing the use of clean, renewable energy sources in their production portfolios.Still-high interest rate environment that remained in the United States during the fourth quarter is likely to have caused higher borrowing expenses for the capital-intensive utilities. As a result, increased interest expenses might have had a negative impact on the sector's profitability.Fourth-quarter weather patterns were warmer than normal for most of the fourth quarter across the service territories, with below-average precipitation. In November, some of the regions experienced snowfall. Overall, the weather is expected to have had a moderate effect on utilities' fourth-quarter top-line performance.