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PSEG (PEG) Up 4.9% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for PSEG (PEG). Shares have added about 4.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Public Service Enterprise Posts In-Line Q1 Earnings

Public Service Enterprise or PSEG reported first-quarter 2020 adjusted operating earnings of $1.03 per share, which came in line with the Zacks Consensus Estimate. However, the bottom line declined 4.6% on a year-over-year basis.

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Including one-time adjustments, the company reported quarterly earnings of 88 cents per share compared with $1.38 in first-quarter 2019.

Total Revenues

Revenues of $2,781 million missed the Zacks Consensus Estimate of $3,237 million by 14.1%. The top-line figure also declined 6.7% from the year-ago quarter’s $2,980 million.

Highlights of the Release

For the first quarter of 2020, the company reported operating income of $797 million, higher than $786 million in the year-ago quarter. Total operating expenses were $1,984 million, down 9.6% from the year-ago quarter.

Interest expenses in the reported quarter were $153 million, compared with $133 million in the first quarter of 2019.

Segment Performance

PSE&G: Segment earnings were $440 million, up from $403 million in the prior-year quarter. PSE&G’s results in the quarter were driven by revenue growth from ongoing capital investment programs as well as growth in transmission rate base.

PSEG Power: Segment adjusted earnings were $85 million compared with $143 million in the prior-year quarter. The downside was due to extremely mild winter weather conditions that caused lower generation output.

PSEG Enterprise/Other: Segment losswas $5 million against earnings of $1 million in the prior-year quarter. The year-over-year downside can be attributed to higher interest and tax expenses.

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 $3.31, lower than the mid-point of the company’s guided 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 fresh estimates.

VGM Scores

Currently, PSEG has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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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