Technology

Why Is PSEG (PEG) Down 0.4% Since Last Earnings Report?

It has been about a month since the last earnings report for PSEG (PEG). Shares have lost about 0.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PSEG due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Public Service Enterprise Group Incorporated before we dive into how investors and analysts have reacted as of late

Public Service Enterprise Q2 Earnings Beat Estimates

Public Service Enterprise Group Inc., or PSEG, reported second-quarter 2020 adjusted operating earnings of 79 cents per share, which exceeded the Zacks Consensus Estimate of 59 cents by 33.9%. Moreover, the bottom line rallied 36.2% on a year-over-year basis.

Excluding one-time adjustments, the company reported quarterly earnings of 89 cents per share compared with 30 cents in second-quarter 2019.

Total Revenues

Revenues of $2,050 million in the quarter missed the Zacks Consensus Estimate of $2,297 million by 10.8%. Moreover, the figure declined 11.5% from the year-ago quarter’s $2,316 million.

In the quarter, electric sales volumes were 8,883 million kilowatt-hours, while gas sales volumes were 596 million therms.

Under Electric sales, Residential sales volumes were 3,236 million kilowatt-hours, whereas Commercial and Industrial sales volumes accounted for 5,572 million kilowatt-hours. Other sales accounted for 75 million kilowatt-hours.

Total gas sales volumes witnessed a 23% increase in firm sales volumes and a 24% decline in non-firm sales volumes of gas.

Highlights of the Release

During the second quarter of 2020, the company reported operating income of $407 million, up from $160 million in the year-ago quarter. Total operating expenses were $1,643 million, down 23.8 % from the year-ago quarter.

Interest expenses in the reported quarter were $151 million compared with $137 million in the year-ago quarter.

Segment Performance

PSE&G: Segment earnings were $283 million, up from $227 million in the prior-year quarter. PSE&G’s results in the quarter were driven by revenue growth from ongoing capital investment programs.

PSEG Power: The segment’s earnings were $170 million against losses of $40 million reported a year ago.

PSEG Enterprise/Other: The segment’s losses were $2 million compared with losses of $34 million in the second quarter of 2019.

Financial Update

Long-term debt as of Jun 30, 2020, was $15,673 million, up from the 2019-end level of $15,108 million.

PSEG generated $1,664 million in cash from operations at the end of first-half 2020 compared to $1,824 million generated in the first half of 2019.

2020 Guidance

The company reiterated its 2020 guidance. Adjusted earnings are still projected to be $3.30-$3.50 per share. The Zacks Consensus Estimate for earnings is currently pegged at $3.35 per share, lower than the midpoint of the company’s guidance range.

PSE&G’s operating earnings are still anticipated to be $1,310-$1,370 million.

The company expects PSEG Power operating earnings to be in the range of $345-$435 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -15.53% due to these changes.

VGM Scores

At this time, PSEG has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PSEG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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