4 Utility Stocks Poised to Surpass Q1 Earnings Expectations

The Zacks Utilities sector’s first-quarter 2025 earnings are expected to have continued to benefit from new electric, natural gas and water rates, cost-saving initiatives and customer growth. Per the latest Earnings Preview, the sector’s first-quarter earnings are expected to rise 13.2% on 2.3% higher revenues.

With the assistance of the Zacks Stock Screener, we have identified four utilities, namely DTE Energy DTE, American Electric Power AEP, Exelon Corporation EXC and NiSource Inc. NI, which are poised to beat on earnings this reporting cycle. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

These stocks have the ideal combination of two ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) — to surpass expectations. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Factors That Might Influence Utility Stocks’ Q1 Results

Utility service providers continue to benefit from certain factors, including higher electricity rates, accretive acquisitions, cost reductions and the implementation of energy-efficiency programs. The power business also gains from continuous efforts to make electric infrastructure more resilient to adverse weather conditions and the ongoing switch to affordable, renewable energy sources for electricity production.

Utilities have been focusing on increasing productivity and their cost structures by investing in digital technologies, integrating essential systems and analyzing data to make informed decisions that will help improve overall operations. Customers' utility bills remain inexpensive as a result of the utilities' decision to replace expensive, outdated coal-fired generating units with more affordable utility-scale clean power units.

Improvement in economic conditions in the service territories has created fresh demand for utility services and boosted the companies' revenues and performance.  

Utilities are also set to take advantage of the growing demand from data centers. The rise of data centers, particularly those supporting AI, has led to a significant increase in electricity consumption. This should have directly benefited utilities and generated higher revenues.

Due to their capital-intensive nature, these utilities also need a steady stream of funding for new asset acquisitions and infrastructure improvements. Since September 2024, the Fed has already lowered its fund rate by one percentage point. Capital-intensive utilities should have improved chances as a result of the rate drop. This is because lower capital servicing expenses must have raised their margins and profitability.

All these factors are expected to have had a positive impact on the utilities' first-quarter overall performance. However, severe storms in March 2025 led to power outages in some of the utilities’ service regions. Strong winds and heavy rain caused customers to lose power. This might have resulted in higher operating expenses to restore the power, thereby offsetting some of the positives in the first quarter.

Potential Utility Outperformers for This Earnings Season

DTE Energy is a diversified energy company. Its portfolio includes non-utility energy businesses focused on power and industrial projects, energy marketing and trading. The company is likely to benefit from rising demand from data centers. However, its service areas in southeast Michigan experienced severe storms with high winds and power outages in March 2025, which is expected to have lowered profitability in the quarter.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.91, indicating an increase of 14.4% from the year-ago reported figure. DTE currently has an Earnings ESP of +4.05% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
 

DTE Energy Company Price and EPS Surprise

DTE Energy Company price-eps-surprise | DTE Energy Company Quote

American Electric Power, through directly and indirectly owned subsidiaries, generates, transmits and distributes electricity, natural gas and other commodities. Favorable rate revisions, solid transmission revenues and increased customer volumes rates are likely to have had a positive impact on first-quarter earnings. However, severe storms in some of its service areas, resulting in power outage, might have negatively impacted earnings.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.75, indicating an increase of 37.8% from the year-ago reported figure. AEP currently has an Earnings ESP of +15.17% and a Zacks Rank #3.
 

American Electric Power Company, Inc. Price and EPS Surprise

American Electric Power Company, Inc. price-eps-surprise | American Electric Power Company, Inc. Quote

Exelon is focused solely on transmission and distribution operations. It serves more than 10.7 million customers through six fully regulated transmission and distribution utilities. EXC is expected to have continued to benefit from its reduction in volumetric risk. New electric and gas rates implemented during the first quarter and previous quarters (in EXC’s service regions) should have contributed positively. Earnings might have benefited from ongoing energy efficiency programs and rising demand from data centers.

The Zacks Consensus Estimate for first-quarter earnings per share is pegged at 75 cents, indicating an increase of 8.7% from the year-ago reported figure. EXC currently has an Earnings ESP of +5.65% and a Zacks Rank #3.
 

Exelon Corporation Price and EPS Surprise

Exelon Corporation price-eps-surprise | Exelon Corporation Quote

NiSource, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. The company’s first-quarter earnings are expected to have benefited from capital programs and new electric and gas rates implemented in its service territories during the first quarter and previous quarters.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 88 cents, indicating an increase of 3.5% from the year-ago reported figure. NiSource currently has an Earnings ESP of +1.71% and a Zacks Rank #3.

 

NiSource, Inc Price and EPS Surprise

NiSource, Inc price-eps-surprise | NiSource, Inc Quote

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

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