Xcel (XEL) Moves 6.7% Higher: Will This Strength Last?

Xcel Energy (XEL) shares soared 6.7% in the last trading session to close at $77.93. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 0.7% gain over the past four weeks.

Xcel Energy has agreed to settle the 2021 Marshall Fire lawsuit, while standing by its claim that its equipment did not cause or contribute to the incident. As part of the settlement, the company will pay $640 million, with nearly $350 million covered by its remaining insurance. Investors responded positively to the news, as the resolution removes a major liability and allows Xcel Energy to stay focused on delivering reliable, high-quality services.

Xcel Energy is set to gain from competitive advantages and a robust pipeline to capture data center demand. The company expects a total customer request for data centers of nearly 8.9 gigawatt by 2029.

This utility is expected to post quarterly earnings of $1.35 per share in its upcoming report, which represents a year-over-year change of +8%. Revenues are expected to be $3.95 billion, up 8.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Xcel, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on XEL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Xcel belongs to the Zacks Utility - Electric Power industry. Another stock from the same industry, FirstEnergy (FE), closed the last trading session 0.6% higher at $44.08. Over the past month, FE has returned 0.5%.

For FirstEnergy, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.71. This represents a change of -16.5% from what the company reported a year ago. FirstEnergy currently has a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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