We have maintained our Neutral recommendation on
) on Sep 23, 2013.
hy the Reiteration?
PG&E Corp. 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 units.
Going forward, the company's earnings growth will be driven by
favorable decisions from the California Public Utilities
Commission (CPUC) and Federal Energy Regulatory Commission, as
well as long-term supply agreements, diversification into
alternative power sources and infrastructure improvement programs
like advanced metering infrastructure program resulting in rate
The CPUC provides the company with ample regulatory support
through progressive mechanisms like decoupling. Decoupling
insulates the top line of the company from lower customer usage
and weather vagaries.
The company's strong balance sheet and cash flows provide
substantial financial flexibility and cushion in the present
challenging business environment. As of Jun 30, 2013, the company
had no cash borrowings and $91 million of letters of credit
outstanding under its $3.0 billion revolving credit facility.
The company has been consistently paying dividends and
currently pays an annual dividend of $1.82 per share. This brings
the average dividend yield to 4.32%.
AES CORP (AES): Free Stock Analysis Report
BROOKFIELD INFR (BIP): Free Stock Analysis
PG&E CORP (PCG): Free Stock Analysis
INTEGRYS ENERGY (TEG): Free Stock Analysis
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Despite these positives, the present unfavorable macro backdrop,
headwinds in the California economy, tepid demand for
electricity, accidental charges and power-price volatility remain
matters of concern.
Other Stocks to Consider
PG&E Corp. presently retains a Zacks Rank #3 (Hold). Stocks
that are worth considering in the space are
The AES Corp.
Brookfield Infrastructure Partners L.P.
Integrys Energy Group, Inc.
), all with a short-term Zacks Rank #2 (Buy).