These 2 Utilities Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks' Earnings ESP (Expected Surprise Prediction) tool is highlighted as a method to identify stocks likely to beat quarterly earnings estimates by comparing the Most Accurate Estimate to the Zacks Consensus. Historically, a positive ESP combined with a Zacks Rank #3 (Hold) or better has predicted a positive earnings surprise 70% of the time, yielding average annual returns of 28.3% over a 10-year backtest. The article highlights American Electric Power (AEP) with a +9.71% ESP and DTE Energy (DTE) with a +3.14% ESP as specific utility stocks currently poised for potential earnings beats, offering investors a data-driven approach to capitalize on pre-earnings movements.

Analysis

Two utility sector stocks, American Electric Power (AEP) and DTE Energy (DTE), are identified as having a high probability of delivering a positive earnings surprise in their upcoming quarterly reports, based on the Zacks Earnings ESP (Expected Surprise Prediction) model. This quantitative model, which historically predicts earnings beats with 70% accuracy when combined with a Zacks Rank of #3 (Hold) or better, shows AEP with a significant positive ESP of +9.71%, derived from a Most Accurate Estimate of $1.35 per share versus a consensus of $1.23. DTE also presents a positive signal with an ESP of +3.14%, based on a Most Accurate Estimate of $1.75 against a $1.70 consensus. Despite these bullish short-term indicators, both companies currently maintain a Zacks Rank of #3 (Hold), suggesting they are expected to perform in-line with the broader market, which frames this insight as a potential event-driven trading opportunity rather than a fundamental re-rating of the stocks.

Key Decisions for Investors

• Consider establishing tactical long positions in AEP and DTE ahead of their late July 2025 earnings releases to capitalize on the potential for a positive earnings surprise and subsequent price appreciation.
• Given that both companies hold a Zacks #3 (Hold) rating, investors should treat these as event-driven opportunities and not necessarily as long-term core holdings without conducting further fundamental analysis.
• Monitor AEP with greater interest due to its substantially higher ESP of +9.71%, which indicates a stronger potential for an earnings beat compared to DTE's +3.14%.
• Investors could utilize the highlighted Earnings ESP filter as a systematic tool to screen for other potential earnings surprise candidates across their portfolios, applying the same methodology to identify similar short-term trading opportunities.