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PSEG (PEG) Down 5.5% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·4 min read

A month has gone by since the last earnings report for PSEG (PEG). Shares have lost about 5.5% 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? 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 Q1 Earnings Beat Estimates, Revenues Rise Y/Y

PSEG, reported first-quarter 2023 adjusted operating earnings of $1.39 per share, which beat the Zacks Consensus Estimate of $1.21 by 14.9%. Earnings also increased 4.5% from the prior-year reported figure.

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The company reported quarterly GAAP earnings per share (EPS) of $1.58 in the first quarter of 2023 compared to a loss of a cent generated in the first quarter of 2022.

Total Revenues

Operating revenues came in at $3,755 million in the first quarter, which beat the Zacks Consensus Estimate of $2,557.7 million by 46.8%. The top line also increased by 62.3% from the year-ago quarter’s $2,313 million.

In the quarter, electric sales volumes were 9,492 million kilowatt-hours, while gas sales volumes were 1,180 million therms.

Under electric sales, residential sales volumes were 2,942 million kilowatt-hours, down 8% from the prior-year quarter figure. Its commercial and industrial sales volumes accounted for 6,452 million kilowatt-hours, registering a decline of 1% from the same period last year.

Other sales were 98 million kilowatt-hours, down 2% from the year-ago quarter figure.

Total gas sales volumes witnessed a decrease of 16% in firm sales volumes and a decrease of 11% in the non-firm sales volumes of gas from the year-ago quarter figure.

Highlights of the Release

In the first quarter of 2023, the operating income came in at $1,648 million compared to the operating loss of $52 million in the year-ago quarter, reflecting massive growth from the prior-year period. Total operating expenses were $2,107 million, down 10.9% from the year-ago quarter.

Segment Performance

PSE&G:The net income was $492 million, down from $509 million in the prior-year quarter.

PSEG Power & Other: Adjusted operating earnings were $203 million compared with operating earnings of $163 million in the prior-year quarter.

Financial Update

The long-term debt (including the current portion of the long-term debt) as of Mar 31, 2023 was $20,215 million compared to $20,270 million as of Dec 31, 2022

PSEG generated $1,837 million in cash from operations during the three months ended Mar 31, 2023 compared with the $472 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 $3.44 per share, slightly lower than 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 range of $200-$225 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -6.11% due to these changes.

VGM Scores

At this time, PSEG has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, 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 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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Zacks Investment Research