Public Service Enterprise Group Inc.
) or PSEG reported third quarter 2012 results before the opening
bell today. During the quarter, operating earnings per share were
75 cents, above the Zacks Consensus Estimate of 72 cents.
However, it was lower than the previous year figure of 83 cents
In the reported quarter, GAAP earnings per share were 68 cents,
up from 52 cents per share in the year-ago period.
The variance of 7 cents between GAAP and operating earnings was
due to a gain of 8 cents on nuclear decommissioning trust ("NDT")
Fund Related Activity and mark-to-market loss of 15 cents at PSEG
Revenue in the reported quarter was $2.40 billion, down from the
year-ago figure of $2.62 billion. The top line was also lower
than the Zacks Consensus Estimate by $218 million.
Residential electric sales were 4,640 million kilowatt-hour (Kwh)
while Commercial & Industrial sales were 7,833 million Kwh in
the reported quarter. Total sales were 12,549 million Kwh.
Total operating expenses in the quarter under review were $1.81
billion, down 12.4% year over year. Lower revenues were offset by
lower operating expenses, resulting in an operating income of
$594 million, up 6.8% year over year.
Segment operating earnings were $217 million in the quarter, down
from $258 million in the prior-year period. The downside reflects
lower prices for energy, partially offset by an increase in
Production from Power's combined cycle natural gas fleet was up
17% year over year with a capacity factor of 67% versus 57% in
the year-ago quarter. Production from the nuclear fleet increased
2% year over year with average capacity factor of 92% compared
with an average capacity factor of 90.6% in the year-ago quarter.
The segment generated operating earnings of $155 million,
marginally up 0.65% year over year. The increase reflects a rise
in transmission revenue, partially offset by unfavorable weather,
increase in operating and maintenance expenses and depreciation
PSEG Energy Holdings:
Segment operating earnings were $10 million, up from the
prior-year figure of $8 million. The results reflect the
continued benefits of a reduction in financing costs, partially
offset by a decline in income on the lease portfolio from the
divestment of leases in late 2011.
Based on the current quarter's performance, the company
expects earnings per share in the range of $2.25 to $2.50 for
full-year 2012. The company expects double-digit compound annual
growth in its regulated operations due to the Susquehanna -
Roseland transmission line through 2014. Moreover, it expects the
line to provide benefits in the long-term to New Jersey's
The company indicated that it is currently unable to estimate its
losses from Hurricane Sandy, however, they would be material.
At the peer
Recently, one of the company's peers,
Xcel Energy Inc.
) posted operating earnings of 78 cents per share for the third
quarter of 2012, up 9 cents from the year-ago quarter and 6 cents
from the Zacks Consensus Estimate.
Xcel Energy reported total revenue of $2.72 billion in the
reported quarter, down 3.9% from $2.83 billion in the year-ago
period. The year-over-year decline was due to lower contributions
from the Natural Gas and Electric segments. Reported quarter
revenue was also lower than the Zacks Consensus Estimate of $3.01
During the quarter, the company's earnings could beat the
Zacks Consensus Estimate, but the revenue fell short of our
expectations. Going forward, Public Service's robust portfolio of
regulated and non-regulated utility assets provides a steady
earnings base and significant growth prospects over the long run.
PUBLIC SV ENTRP (PEG): Free Stock Analysis
XCEL ENERGY INC (XEL): Free Stock Analysis
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The company has been striving to optimize generation margins by
improving cost-structure and through improvements in performance
and reliability of its nuclear and fossil units. Management has
taken several measures to improve financial stability and reduce
the overall risk profile of the company. The company has been
pursuing growth opportunities in the core U.S. market and is
increasing capital allocation for projects that provide good
risk-adjusted returns. Going forward, the low-cost nuclear fleet,
assumed rate relief and added generating capacities will drive
Public Service's earnings growth.
However, we are concerned about the present unfavorable macro
backdrop, the rising cost of coal, higher pension & financial
costs, power-price volatility and the negative impacts from Sandy
Hurricane. The company presently retains a short-term Zacks #3
Rank (Hold) that corresponds with our long-term Neutral
recommendation on the stock.
Based in Newark, New Jersey, Public Service Enterprise Group
Incorporated is a diversified utility holding company. The
company's operations are mostly located in the Northeastern and
Mid-Atlantic parts of the U.S. Public Service Enterprise
principally operates through three key subsidiaries: Public
Service Electric and Gas Company (PSE&G), PSEG Power LLC
(PSEG Power) and PSEG Energy Holdings LLC (PSEG Energy).