Why Is PSEG (PEG) Up 1.5% Since Last Earnings Report?

A month has gone by since the last earnings report for PSEG (PEG). Shares have added about 1.5% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PSEG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

PSEG Q3 Earnings Beat Estimates, Revenues Rise Y/Y

PSEG reported third-quarter 2023 adjusted operating earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 75 cents by 13.3%. However, earnings decreased 1.2% from the prior-year reported figure.

The company reported quarterly GAAP earnings per share (EPS) of 27 cents in the third quarter of 2023 compared with 22 cents reported in the third quarter of 2022.

Total Revenues

Operating revenues came in at $2,456 million in the third quarter, which beat the Zacks Consensus Estimate of $2,423.5 million by 1.3%. The top line also increased by 8.1% from the year-ago quarter’s $2,076 million.

In the quarter, electric sales volumes were 11,723 million kilowatt-hours, while gas sales volumes were 476 million therms.

Under electric sales, residential sales volumes were 4,518 million kilowatt-hours, down 9% from the prior-year quarter figure. Its commercial and industrial sales volumes accounted for 7,133 million kilowatt-hours, registering a decline of 2% from the same period last year.

Other sales were 72 million kilowatt-hours, flat with the year-ago quarter figure.

Total gas sales volumes witnessed an increase of 14% in firm sales volumes and a drop of 12% in the non-firm sales volumes of gas from the year-ago quarter figure.

Highlights of the Release

In the third quarter of 2023, the operating income came in at $551 million compared with the operating income of $173 million in the year-ago quarter, reflecting massive growth from the prior-year period. Total operating expenses were $1,905 million, down 9.2% from the year-ago quarter.

Segmental Performance

PSE&G:The net income was $403 million, up from $399 million in the prior-year quarter.

PSEG Power & Other: Adjusted operating earnings were $22 million compared with operating earnings of $30 million in the prior-year quarter.

Financial Update

The long-term debt (including the current portion of the long-term debt) as of Sep 30, 2023 was $19,734 million compared with $20,270 million as of Dec 31, 2022

PSEG generated $3,096 million in cash from operations during the nine months ended Sep 30, 2023 compared with the $701 million generated in the prior-year period.

2023 Guidance

The company reaffirmed its 2023 guidance. PEG expects its adjusted operating earnings in the range of $1,700-$1,750 million and adjusted EPS in the range of $3.40-$3.50. The Zacks Consensus Estimate for earnings is currently pegged at $3.45 per share, in line with the midpoint of the company’s guided range.

PSEG expects its PSE&G adjusted operating earnings in the range of $1,500-$1,525 million for 2023. It anticipates PSEG Power & Other adjusted operating earnings in the band of $200-$225 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 -5.86% due to these changes.

VGM Scores

At this time, PSEG has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 this revision 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.

Performance of an Industry Player

PSEG is part of the Zacks Utility - Electric Power industry. Over the past month, CMS Energy (CMS), a stock from the same industry, has gained 3.7%. The company reported its results for the quarter ended September 2023 more than a month ago.

CMS Energy reported revenues of $1.67 billion in the last reported quarter, representing a year-over-year change of -17.3%. EPS of $0.61 for the same period compares with $0.56 a year ago.

For the current quarter, CMS Energy is expected to post earnings of $1.05 per share, indicating a change of +75% from the year-ago quarter. The Zacks Consensus Estimate has changed -35.9% over the last 30 days.

CMS Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.

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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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