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

Xcel Energy (XEL) has a +1.50% Zacks Earnings ESP, with a $1.35 most accurate EPS estimate versus $1.33 consensus ahead of its October 29, 2026 report; it carries a #3 (Hold) rank. Entergy (ETR) has a +4.59% ESP, with a $1.71 estimate versus $1.64 consensus before its November 4, 2026 report, and a #2 (Buy) rank. The article says the positive ESPs indicate potential earnings beats, not confirmed results; Zacks cites a 70% positive-surprise rate and 28.3% average annual returns in a 10-year backtest for stocks combining a #3 rank or better with positive ESP.

Analysis

The signal is an estimate-revision screen, not evidence of improving underlying economics. A small positive estimate gap—particularly XEL’s—can be overwhelmed by weather, timing of fuel or storm-cost recovery, regulatory true-ups, and financing expense. For regulated utilities, an EPS beat matters less if it comes from timing and management leaves full-year guidance or capital-spending assumptions unchanged; a miss or higher funding-cost outlook can also reset the rate-base growth narrative.

Near term (through the November reports), the main trade risk is an earnings event layered on top of interest-rate duration: a Treasury-yield move can dominate a modest beat. The claimed historical screen returns are not a basis for sizing without checking methodology, survivorship, transaction costs, and performance specifically in utilities. At 1–3 months, listen for guidance changes and regulator-approved recovery, not just quarterly EPS. Over 6–18 months, persistent higher borrowing costs or delayed cost recovery would pressure sector valuations and financing flexibility; favorable rate relief could support the group. No clear competitive winner follows from this screen alone, and sector peers/utility ETFs may move more on rates than on company-specific beats.

Contrarian view: a reported beat may already be anticipated by the positive revisions and may not lift shares absent guidance upside. Conversely, the more actionable surprise could be a rate or regulatory update rather than EPS. Verify the latest estimates, implied event moves, debt/refinancing exposure, and management guidance before taking risk.

Key Decisions for Investors

• Treat XEL and ETR as earnings watch-list names, not automatic longs. Before either release, compare options-implied moves with recent realized moves and current Treasury-yield sensitivity; avoid paying for event volatility if the implied move is rich.
• If a directional event position is required, consider a small, defined-risk call spread only after confirming the estimate revisions and valuation already priced in; ETR’s larger stated ESP is not by itself enough to justify a larger position. Limit loss to premium.
• After results, favor a long only if EPS strength is accompanied by maintained or raised full-year guidance and credible cost-recovery commentary. Falsify the upside thesis on guidance reduction, unrecovered storm/fuel costs, or a material rise in financing-cost assumptions.
• Monitor 10-year Treasury yields and regulatory decisions over the next 1–3 months; a sharp yield rise or delayed recovery can overwhelm an earnings beat. Reassess any utility-sector exposure if rates move against the thesis.