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

It’s been about a month since PSEG’s (PEG) last earnings report. Shares have risen about 4.9% in that time, underperforming the S&P 500.

Will the recent positive trend continue until the next earnings release, or will PSEG face a recession? 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 better understand the important catalysts.

PSEG’s profits for the first quarter do not meet estimates, revenues decreased y/y

Public Service Enterprise Group (PSEG) reported first-quarter 2024 adjusted earnings of $1.31 per share, missing the Zacks Consensus Estimate of $1.32 by 0.8%. Profits were also down 5.8% from a year earlier.

The company reported quarterly GAAP earnings per share (EPS) of $1.06, compared to $2.58 in the same period in 2023.

The year-on-year deterioration can be attributed to higher capital expenditure.

Total revenues

First-quarter operating revenues were $2.76 billion, up 4.1% from the Zacks Consensus Estimate of $2.65 billion. However, revenue was down 26.5% from the $3.76 billion figure for the year-earlier quarter.

Sales volume

Electricity sales volume amounted to 9,731 million kilowatt hours, an increase of 3% year-on-year. In turn, the volume of gas sales increased by 8% to 1,277 million therms.

Within electricity sales, the sales volume of residential products amounted to 3,089 million kilowatt hours, an increase of 5% compared to the previous quarter’s value. Commercial and industrial sales volume was 6,542 million kilowatt-hours, up 1% year-over-year.

Other sales amounted to 100 million kilowatt hours, up 2% from the prior-year quarter.

Total gas sales volume year-on-year increased by 6% and 23% for fixed and casual sales, respectively.

Release highlights

Operating income in the first quarter was $685 million compared to $1,648 million in the same period last year. This represented a year-on-year decline of 58.4%. Total operating expenses were $2.08 billion, down 1.5% from the prior-year quarter’s actual numbers.

Segment efficiency

PSE&G: Net income for this segment was $488 million, up from $487 million reported in the first quarter of 2023.

PSEG power supply and others: The unit’s adjusted operating income was $169 million, compared to $203 million in the prior-year quarter.

Financial update

Long-term debt (including the current portion of long-term debt) was $21.26 billion as of March 31, 2024, compared to $19.28 billion as of December 31, 2023.

PSEG generated cash from operations of $0.66 billion in the first quarter, compared to $1.86 billion in the prior-year period.

Guidelines 2024

The company maintained its full-year forecasts. PEG continues to expect adjusted earnings per share in the range of $3.60-$3.70. The Zacks Consensus Estimate currently estimates earnings per share at $3.66 per share, which is just above the company’s mid-point range.

How have estimates changed since then?

Last month, investors saw a downward trend in new estimates.

VGM results

At this point, PSEG has an average Growth Score of C, although it lags well behind its Momentum Score of F. However, the stock is rated a C on the value side, ranking in the middle 20% for this investment strategy.

Overall, the stock has a Total VGM Score of D. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company generally show a downward trend, and the scale of this adjustment was net zero. Notably, PSEG has a Zacks Rank of #2 (Buy). We expect an above-average rate of return on shares in the coming months.

Industry player performance

PSEG is part of the Zacks Utility – Electric Power industry. Over the past month, shares of the same industry NextEra Energy (NEE) have gained 11.8%. More than a month ago, the company published its results for the quarter ended March 2024.

NextEra reported revenue of $5.73 billion in its most recently reported quarter, representing a year-over-year change of -14.7%. EPS of $0.91 for the same period compared to $0.84 a year ago.

For the current quarter, NextEra is expected to report earnings per share of $0.90, which would represent a year-over-year change of +2.3%. Over the past 30 days, the Zacks Consensus Estimate has moved -0.6%.

The overall direction and magnitude of estimate revisions translates into a Zacks Rank #4 (Sell) for NextEra. The stock also has a VGM Rating of D.

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