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PG&E Corp. (PCG) Q4 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research
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PG&E Corporation PCG reported adjusted operating earnings per share of 80 cents in fourth-quarter 2018, which surpassed the Zacks Consensus Estimate of 62 cents by 29%. The bottom line also increased 27% from the year-ago quarter’s figure.

This year-over-year upside can be attributed to a reduction in short-term incentive compensation, growth in rate base earnings, timing of operational spend in 2017 and cost recoveries of insurance premiums in 2018.

Including one-time items, the company reported GAAP loss of $13.24 per share, against earnings of 22 cents generated in the prior-year quarter.

For 2018, PG&E Corp.’s adjusted operating EPS came in at $4 per share, up 8.7% from the prior-year quarter’s $3.68. The figure also surpassed the
Zacks Consensus Estimate of $3.81 by 5%.

Revenue Update

PG&E Corp’s total revenues of $4,088 million missed the Zacks Consensus Estimate of $4,285 million by 4.6%. The top line also declined 2.2% from the year-ago quarter’s number.

While electric revenues decreased 3.37% from the prior-year quarter’s figure, natural gas revenues improved 9% year over year.

For 2018, PG&E Corp.’s revenues were $16,759 million, down 2.2% from the prior-year quarter’s $17,135 million. The figure also missed the Zacks Consensus Estimate of $17,110 million by 2.05%.

Operational Highlights

Operating expenses in the reported quarter totaled $13,618 million, up 269.8% from $3,683 million in fourth-quarter 2017. Costs increased due to
higher operating and maintenance expenses along with higher depreciation, amortization and decommissioning expenses.

The company generated operating losses of $9,530 million, against operating income of $417 million in last year’s fourth quarter.

Interest expenses in fourth-quarter 2018 summed $697 million compared with $225 million in the year-ago period.

Wildfire-Related Costs

The company has incurred a total of $14 billion in pre-tax charges related to the 2018 Camp Fire and the 2017 Northern California wildfires to date, which reflect the lower end of the range of estimated losses the company faces from such wildfires. The charges represent a portion of the previously-announced estimate of potential wildfire liabilities, which could exceed $30 billion.

Guidance

PG&E Corp has not provided guidance for 2019 GAAP earnings and adjusted earnings from operations, due to the continuing uncertainty related to the 2018 Camp Fire and the 2017 Northern California wildfires, and the Chapter 11 proceedings.

Zacks Rank

PG&E Corp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

DTE Energy Company DTE reported fourth-quarter 2018 operating earnings per share (EPS) of 91 cents, which missed the Zacks Consensus Estimate of 92 cents by a penny.

American Electric Power Co., Inc. AEP reported fourth-quarter 2018 operating earnings per share (EPS) of 72 cents, in line with the Zacks Consensus Estimate.

NextEra Energy, Inc. NEE reported fourth-quarter 2018 adjusted earnings of $1.49 per share, which fell short of the Zacks Consensus Estimate of $1.51 by 1.3%.

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