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PG&E Corp Outlines Growth Strategy, Streamlining Efforts

Zacks Equity Research

PG&E Corporation PCG announced that, along with its subsidiary Pacific Gas and Electric Company, it will implement certain changes to streamline its existing operations. Its primary aim is to reduce the workforce, maintain affordability for customers and pursue systematic investments to strengthen infrastructure and operations.

Growth Strategy

One of the proven strategies for growth is to redirect funds for better returns. PG&E Corporation is on this path, with the company planning to reduce the number of officers by 15% and other employee count by 390. In addition, the company eliminated the roles of nearly 800 non-employee contractors and has decided not to fill 500 open, non-critical positions.

A major portion of the cost savings will come from reductions in spending on materials and contracts, renegotiating terms with vendors, and reducing expenses for professional services and discretionary expenses.

These decisions will allow the company to modernize its infrastructure and invest in the safety of its electric and gas systems, in turn ensuring reliable as well as affordable services for its customers.

Capital Expenditure Plan

PG&E Corporation revealed expectations of annual capital expenditure of $5.4–$6.4 billion over the 2017–2019 period. The total expenditure will distributed judiciously between the electric distribution and transmission projects, and natural gas systems.

The company is also actively adding renewable assets in its generation portfolio and is one of the leading utilities in the U.S. in the integration of private rooftop solar arrays.

Price Movement

PG&E Corporation’s stock gained about 16.4% in the last one year, outperforming the Zacks Categorized Utility-Electric Power industry’s gain of 6.5%.

The company possesses a solid portfolio of regulated utility assets that offer a stable earnings base and substantial long-term growth potential.

Zacks Rank & Key Picks

PG&E Corporation currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include DTE Energy Co. DTE, Great Plains Energy Inc. GXP and Exelon Corporation EXC.

DTE Energy sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.. The company’s earnings surpassed the Zacks Consensus Estimate by 27.3% in the last reported quarter. Its 2016 estimates improved by a penny to $5.27 over the last 60 days.

Great Plains Energy is another Zacks Rank #1 stock. The company’s earnings surpassed the Zacks Consensus Estimate by 5.3% in the last reported quarter. Its 2016 estimates improved by a penny to $1.80 over the last 60 days.

Exelon currently carries a Zacks Rank #2 (Buy). Its earnings surpassed the Zacks Consensus Estimate by 22.9% in the last reported quarter. Meanwhile, 2016 estimates improved by 3 cents to $2.68 over the last 60 days.

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Exelon Corporation (EXC): Free Stock Analysis Report
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