Stock Analysis | Eversource Outlook - Bearish Technicals and Mixed Fundamentals Signal Caution

Market Snapshot

Headline Takeaway: Eversource (ES) is currently in a bearish technical environment with a weak internal diagnostic score of 3.26, suggesting traders should consider avoiding entry for now.

News Highlights

Recent news has painted a mixed picture for the energy sector:

• Michigan Regulator Shift: Governor Gretchen Whitmer has replaced a clean energy advocate on the state's utility board with an "industry ally," potentially signaling a shift in regulatory support for traditional utilities like Eversource.
• Colorado Transmission Initiative: Four Colorado utilities have joined forces to explore new transmission solutions to better serve their customers. This could increase demand for stable utility infrastructure providers in the region.
• Electric Utility Investment Surge: U.S. investor-owned electric utilities are set to invest over $1.1 trillion between 2025 and 2029 to meet rising demand. This broader industry trend could indirectly benefit Eversource if the company secures its share of growth projects.

Analyst Views & Fundamentals

Analyst sentiment is largely neutral, with a simple mean rating of 3.00 and a performance-weighted rating of 3.30. These scores are consistent with each other and reflect a cautious stance. The only recent rating from Bank of America’s Julien Dumoulin-Smith was Neutral, and his historical performance has been strong (100% win rate over 2 past calls), though he's only made a few predictions recently.

However, this neutral rating contrasts with Eversource’s current downward price trend (-0.23%), which suggests the market may be underperforming relative to analyst expectations.

On the fundamental side, here’s how the key metrics stack up with our internal diagnostic scores (0-10):

• Revenue to Market Value (Revenue-MV): 44.66% → score 2.00
• Days Sales Outstanding: 42.73 days → score 2.00
• Gross Profit Margin (GPM): 71.15% → score 1.00
• Non-Current Assets / Total Assets: 55.12% → score 2.00
• Return on Total Assets (ROTA): 2.98% → score 1.00
• Cost of Sales Ratio: 31.04% → score 2.00
• Current Assets / Total Assets: 45.07% → score 3.00

While some balance sheet metrics are decent (like current assets), profitability and efficiency indicators like GPM and ROTA are pulling the fundamentals lower, contributing to the overall 2.66 internal diagnostic score.

Money-Flow Trends

Big money is cautious, with a negative fund-flow trend and a block-inflow ratio of 49.96%, slightly favoring outflows. Retail investors are more optimistic, with a positive trend and inflow ratio of 50.92%. However, the broader picture shows a negative overall trend driven by large and extra-large investors, who hold significant influence in utility stocks.

Key Technical Signals

Technically, Eversource is facing headwinds. Three out of four indicators in our internal diagnostic model are bearish, with the MACD Death Cross and Marubozu White both scoring very low:

• MACD Death Cross: score 3.68 — historically a negative signal with an average return of -0.24% and a 50% win rate.
• Marubozu White: score 1.00 — a strong bearish signal with an average return of -1.2% and only 33% win rate.
• WR Overbought: score 1.57 — a mixed signal with a negative bias (42.65% win rate over 68 signals).
• Earnings Release Date: score 6.78 — a positive signal (33.33% win rate) from a strong 66.67% average return over 3 signals.

Recent Chart Patterns (August 23–31): On July 31, a key MACD Death Cross and Marubozu White pattern emerged, while the WR Overbought condition persisted throughout the period. These signals confirm a weak momentum environment.

Key Insight: The technicals suggest a lack of clear direction with 3 bearish vs. 0 bullish signals, reinforcing the model’s cautionary stance.

Conclusion

Eversource remains in a weak technical and mixed fundamental environment. With bearish chart patterns emerging and analyst ratings trending neutral, the stock is likely to remain under pressure in the near term. Investors may want to wait for a clearer breakout or a positive earnings report to gauge if the company can regain its footing.

Actionable Takeaway: Consider holding off on new long positions and monitor the August earnings report for potential catalysts. If fundamentals strengthen and technicals reverse, Eversource could become a more compelling opportunity.