Public Service Enterprise Group Inc.
or PSEG (
) reported third quarter 2013 earnings of 76 cents per share, in
line with the Zacks Consensus Estimate. Earnings were up 1.33%
year over year. The results reflect higher capacity prices and a
greater level of investment.
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Including a gain of 2 cents for NDT Fund Related Activity, a
mark-to-market gain of 1 cent and an expense of 2 cents related
to storm operation and maintenance, GAAP earnings per share
reported by the company were 77 cents per share, up from 68 cents
in the prior-year period.
Revenue in the reported quarter was $2,554.0 million, up 6.3%
from the year-ago figure of $2,402.0 million. Revenue was also
above the Zacks Consensus Estimate by $46 million.
During the third quarter, Electric sales volume in the reported
quarter declined 4.4% year over year to 12,000 million kwh, while
gas sales volume was down 17.1% to 534 million therms.
Highlights of the Release
Total operating expenses were $1,842 million, up 1.9% from the
year-ago level. The increase in total expenses was primarily due
to a 15.2% rise in operation and maintenance expenses, partially
offset by an 8.9% decline in energy costs.
The increase in operating expenses was offset by higher revenues,
resulting in an operating income of $712 million, up
approximately 20% year over year. The rise in expenses
notwithstanding, operating income climbed a sharp 20% year over
year on the back of a robust top line.
Segment operating earnings were $216.0 million in the quarter
versus $217.0 million in the prior-year period. The results
reflect higher PJM capacity prices, an improvement in the market
price of energy and a decline in the supply cost of gas.
The segment generated operating earnings of $168.0 million, up
8.4% year over year. The results were driven by increased revenue
associated with a greater level of investment.
PSEG Energy Holdings:
Segment operating earnings were $1.0 million, down from the
prior-year figure of $10.0 million. The results reflect the
continued monetization of assets within Holdings' portfolio and
the absence of gains on an asset sale in the year-ago quarter.
The company increased its operating earnings per share guidance
for 2013 to a range of $2.40 to $2.55 versus its previous
guidance of $2.25 to $2.50 per share. The company believes that
it is on track to achieve its goal of double-digit earnings
growth driven by increased investment in transmission and strong
At the Peer
American Electric Power Company Inc.
) reported third quarter 2013 operating earnings of $1.10 per
share, beating the Zacks Consensus Estimate of $1.08 by 1.9%. The
quarterly figure also improved 7.8% from the year-ago profit
level of $1.02. This improved performance reflects positive
returns from the investments made in the company's regulated
Public Service Enterprise Group posted mixed results with the top
line beating the Zacks Consensus Estimate while the bottom line
coming in line with expectations. Despite the sluggish growth in
electric demand, total revenue and earnings were up year over
year driven by stepped-up transmission investment, higher PJM
capacity prices and an improvement in market prices for energy.
Going forward, the company's solid portfolio of regulated and
non-regulated utility assets will help in maintaining a stable
earnings base and substantial long-term growth potential.
However, increasing cost of coal, higher pension & financial
costs and power-price volatility keep us concerned. The
company currently has a Zacks Rank #3 (Hold).
Stocks that look better positioned are
NRG Yield, Inc.
UNS Energy Corp.
), both with a Zacks Rank #1 (Strong Buy).