Are Utilities Stocks Lagging Centrica (CPYYY) This Year?

Centrica PLC (CPYYY), with a Zacks Rank #2 (Buy), has significantly outperformed the Utilities sector year-to-date, returning approximately 25% compared to the sector's 9.3% average, driven by a 2.2% increase in its full-year earnings consensus estimate over the past quarter. Tele2 (TLTZY) has also outperformed with a 46.5% year-to-date return and a 21.4% increase in its current year EPS estimate over the past three months, also holding a Zacks Rank #2 (Buy). Investors interested in the Utilities sector may want to monitor CPYYY and TLTZY as they attempt to continue their solid performance.

Analysis

Centrica PLC (CPYYY) is demonstrating notable strength within the Utilities sector, which itself holds a favorable Zacks Sector Rank of #2 out of 16 sectors. CPYYY's individual Zacks Rank of #2 (Buy) is supported by a 2.2% upward revision in its full-year consensus earnings estimate over the past quarter, reflecting improving analyst sentiment and a stronger earnings outlook. This positive outlook is mirrored in its stock performance, with a year-to-date return of approximately 25%, substantially outpacing the Utilities sector's average return of 9.3% and the Utility - Gas Distribution industry's (Zacks Industry Rank #32) modest 0.2% gain. Similarly, Tele2 (TLTZY) has exhibited exceptional year-to-date returns of 46.5% and also carries a Zacks Rank #2 (Buy). Tele2's current year consensus EPS estimate has surged by 21.4% in the last three months, a significant outperformance when compared to the -11.2% year-to-date performance of its Wireline Non-US industry (Zacks Industry Rank #2). The Zacks Rank system, which underpins these ratings, emphasizes earnings estimates and revisions and has a historical tendency to identify stocks poised for market outperformance over the subsequent one to three months.

Key Decisions for Investors

• Investors seeking exposure to the Utilities sector or outperforming stocks may find Centrica PLC and Tele2 worthy of consideration, given their strong year-to-date returns, positive earnings estimate revisions, and Zacks Rank #2 (Buy) ratings.
• Monitoring the trajectory of earnings estimate revisions for both CPYYY and TLTZY is crucial, as these are key drivers of their Zacks Rank and the positive sentiment surrounding their earnings outlook.
• The substantial outperformance of CPYYY relative to its Utility - Gas Distribution sub-industry and TLTZY against the broader Wireline Non-US industry warrants further due diligence to understand the sustainability of these company-specific growth drivers.