Why Investors Need to Take Advantage of These 2 Utilities Stocks Now

Zacks highlights its Earnings ESP (Expected Surprise Prediction) tool, which, when combined with a Zacks Rank #3 (Hold) or stronger, has historically identified stocks that posted positive bottom-line surprises 70% of the time, yielding average annual returns of 28% over a 10-year backtest. The tool indicates DTE Energy (DTE), with a +3.14% ESP for its July 24, 2025 report, and Entergy (ETR), with a +24.69% ESP for its August 7, 2025 report, as utilities stocks potentially poised for earnings beats.

Analysis

The provided analysis centers on the Zacks Earnings ESP (Expected Surprise Prediction) metric as a tool for identifying potential earnings beats. According to the source's 10-year backtest, combining a positive ESP with a Zacks Rank of #3 (Hold) or better has historically signaled a 70% probability of a positive earnings surprise, yielding average annual returns of approximately 28%. Two utility stocks are highlighted using this methodology. DTE Energy (DTE), with a Zacks Rank #3 (Hold), shows a positive ESP of +3.14%, based on a Most Accurate Estimate of $1.75 per share versus a consensus of $1.70 ahead of its July 24, 2025, earnings report. This suggests a potential for a modest upside surprise for a stock otherwise expected to perform in-line with the market. A more pronounced signal is observed for Entergy (ETR), which holds a Zacks Rank #2 (Buy) and a significant ESP of +24.69%. This large deviation stems from its Most Accurate Estimate of $1.01 per share compared to a consensus of just $0.81 for its August 7, 2025, report, indicating a stronger conviction among recent analyst revisions for a substantial earnings beat and potential market outperformance.

Key Decisions for Investors

• Investors employing event-driven strategies may consider the positive Earnings ESP for DTE Energy and Entergy as a quantitative signal for potential upside ahead of their respective Q3 2025 earnings reports.
• Given Entergy's (ETR) stronger 'Buy' rating and significantly higher ESP of +24.69%, it represents a more compelling candidate for a tactical long position based on the expectation of a substantial earnings beat.
• For DTE Energy (DTE), the 'Hold' rating warrants a more cautious approach; while its positive ESP of +3.14% suggests a potential beat, the stock's broader expectation is for in-line market performance, making it a candidate for monitoring rather than aggressive positioning.
• It is crucial to acknowledge that this strategy is based on a proprietary indicator, and an earnings beat does not always guarantee a positive stock price reaction, warranting careful risk management.