) adjusted operating earnings per share of 42 cents in the fourth
quarter of 2013 were ahead of the Zacks Consensus Estimate of 40
cents, backed by higher rate base earnings. However, the reported
figure came in below the year-ago number of 59 cents by 28.8% due
to lower regulated return on equity and debt compared to last
year and a higher number of shares outstanding.
On a reported basis, the company clocked earnings per share of 19
cents as against a loss of 3 cents in the year-ago quarter.
Full year 2013 adjusted earnings were $2.72 per share, beating
our projection by 1.1%. However, the reported number decreased
15.5% from last year. On a GAAP basis, earnings were $1.83 in
2013 versus $1.92 in 2012.
PG&E's top line increased 3.7% to $15,598.0 million in 2013
from $15,040 million in the year-ago period and surpassed our
expectation of $15,298 million. Electric revenue generated
$12,494 million in the quarter (up 4.0% year over year), while
Natural Gas clocked $3,104.0 million (up 2.7%).
On the cost front, total operating expenses stood at $13,836
million in 2013, up 3.7% from the year-earlier level of $13,347.0
million. The rise was mainly due to the surge in cost of
electricity as well as natural gas.
Due to the company's pending major rate cases and the California
Public Utilities Commission's delays in resolving the gas penalty
proceedings, the company has not provided any earnings
expectation for 2014.
At the Peer
American Electric Power Company Inc.
) reported fourth quarter 2013 operating earnings of 60 cents per
share, beating the Zacks Consensus Estimate of 56 cents by 7.1%.
The quarterly figure also improved 20% from the year-ago profit
of 50 cents.
CMS Energy Corp.
) posted fourth-quarter 2013 earnings per share of 37 cents on
both adjusted and GAAP basis. The quarterly figure was on par
with the Zacks Consensus Estimate, but increased 48% on a
The company holds a Zacks Rank #3 (Hold). In the near term, we
would advise investors to focus on its Zacks Rank #1 (Strong Buy)
Korea Electric Power Corp.
PG&E Corporation nevertheless has a solid portfolio of
regulated utility assets that offer a stable earnings base and
substantial long-term growth potential. The company strives to
optimize generation margins by improving its cost structure,
performance and reliability of its nuclear as well as fossil
In 2013, the company validated the safe operating pressure for
all of its 6,750 miles of gas transmission pipelines, and opened
a cutting-edge control center for its gas transmission and
distribution operations. PG&E is thus committed to ensure the
safety of its gas pipeline systems.
Going forward, we expect the company's earnings growth to be
driven by favorable decisions from California Public Utilities
Commission and Federal Energy Regulatory Commission, as well as
long-term supply agreements, diversification into alternative
power sources and infrastructure improvement programs resulting
in rate base growth.
However, the present unfavorable macro backdrop, tepid demand for
electricity, any accidental charges or severe fluctuation in
prices keep us concerned.
AMER ELEC PWR (AEP): Free Stock Analysis
CMS ENERGY (CMS): Free Stock Analysis Report
KOREA ELEC PWR (KEP): Free Stock Analysis
PG&E CORP (PCG): Free Stock Analysis
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