Why Is PSEG (PEG) Down 1.6% Since Last Earnings Report?

A month has gone by since the last earnings report for PSEG (PEG). Shares have lost about 1.6% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

PSEG Q1 Earnings Beat Estimates, Revenues Fall Y/Y

Public Service Enterprise Group Incorporated or PSEG reported first-quarter 2022 adjusted operating earnings of $1.33 per share, which surpassed the Zacks Consensus Estimate of $1.11 by 19.8%.

The company reported a quarterly GAAP loss of nearly a penny per share in the first quarter of 2022, against the earnings of $1.28 generated in the first quarter of 2021.

Total Revenues

Operating revenues came in at $2,313 millionin the first quarter, which missed the Zacks Consensus Estimate of $2,539.3 million by 8.9%. The top line also decreased by 19.9% from the year-ago quarter’s $2,889 million.

In the quarter, electric sales volumes were 9,812 million kilowatt-hours, while gas sales volumes were 1,394 million therms.

Under electric sales, Residential sales volumes were 3,201 million kilowatt-hours, down 2% from the prior-year quarter figure. ItsCommercial and Industrial sales volumes accounted for 6,511 million kilowatt-hours, up 4% from the same period last year. Other sales were 100 million kilowatt-hours, up 1% from the year-ago quarter figure.

Total gas sales volumes witnessed an increaseof2% in firm sales volumes and a 43% decline in the non-firm sales volumes of gas from the year-ago quarter figure.

Highlights of the Release

In the first quarter of 2022, the operating loss came in at $52 million against the operating income of $741 million in the year-ago quarter.

Total operating expenses were $2,365 million, up 10.1% from the year-ago quarter, mainly due to the higher energy cost and higher depreciation expenses.

Segment Performance

PSE&G:Operating earnings were $509 million, up from $477 million in the prior-year quarter.

Carbon-Free Infrastructure/Other: Operating earnings were $163 million compared with $173 million in the prior-year quarter.

Financial Update

The long-term debt (includes the current portion of the long-term debt) as of Mar 31, 2022 was $17,668 million, up from the 2021-end level of $15,919 million.

PSEG generated $472 million in cash from operations in the first quarter of 2022 compared with the $1,027 million generated in the prior-year period.

2022 Guidance

The company reaffirmed its 2022 guidance. PEG continues to expect its adjusted operating earnings in the range of $1,680-$1,780 million and adjusted earnings per share (EPS) in the range of $3.35-$3.55. The Zacks Consensus Estimate for earnings is currently pegged at $3.51 per share, higher than the midpoint of the company’s guided range.

The company also expects its PSE&G adjusted operating earnings in the range of $1,510-$1,560 million for 2022. It anticipates Carbon-Free, Infrastructure & Other adjusted operating earnings in the range of $170-$220 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

The consensus estimate has shifted -7.43% due to these changes.

VGM Scores

Currently, PSEG has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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, PG&E (PCG), a stock from the same industry, has gained 10.9%. The company reported its results for the quarter ended June 2022 more than a month ago.

PG&E reported revenues of $5.12 billion in the last reported quarter, representing a year-over-year change of -1.9%. EPS of $0.25 for the same period compares with $0.27 a year ago.

For the current quarter, PG&E is expected to post earnings of $0.22 per share, indicating a change of -8.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +7.5% over the last 30 days.

PG&E has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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