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

Zacks highlights its proprietary Earnings ESP tool as a method to identify stocks likely to beat quarterly earnings estimates, leveraging the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, combined with the Zacks Rank. This strategy, when applied to stocks with a Zacks Rank #3 (Hold) or better and a positive ESP, has historically resulted in a positive earnings surprise 70% of the time and yielded average annual returns of 28.3% over a 10-year backtest. The article specifically points to utilities PPL and Duke Energy (DUK) as current examples exhibiting positive ESPs, suggesting their potential for upcoming earnings beats.

Analysis

Based on the Zacks Earnings ESP (Expected Surprise Prediction) methodology, utility stocks PPL Corporation (PPL) and Duke Energy (DUK) are positioned for a potential earnings beat in their upcoming quarterly reports. This proprietary indicator, which has historically predicted positive surprises 70% of the time when combined with a Zacks Rank of #3 or better, identifies discrepancies between the most recent analyst estimates and the broader consensus. For PPL, the Most Accurate Estimate of $0.40 per share surpasses the consensus of $0.39, yielding a positive ESP of +1.28% ahead of its August 1, 2025 report. Similarly, Duke Energy exhibits a stronger positive ESP of +2.13%, with its Most Accurate Estimate at $1.32 against a consensus of $1.29 for its August 5, 2025 earnings. While the positive ESPs are a bullish short-term signal, it is notable that both companies currently hold a Zacks Rank #3 (Hold), which projects in-line performance with the broader market, suggesting a nuanced outlook.

Key Decisions for Investors

• Investors may consider establishing tactical long positions in PPL and DUK ahead of their early August earnings announcements to capitalize on the heightened probability of a positive earnings surprise indicated by their respective ESP figures.
• It is crucial to weigh the positive ESP signal against the neutral Zacks Rank #3 (Hold) for both stocks, which suggests that any potential upside from an earnings beat might be moderate and in-line with general market performance.
• For those employing a quantitative approach, the primary takeaway is to utilize a tool like the Earnings ESP filter to identify other candidates, prioritizing those that combine a positive ESP with a more compelling Zacks Rank #1 (Strong Buy) or #2 (Buy) for a higher probability of outperformance.