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PG&E Corp (PCG) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research

PG&E Corporation PCG is set to report second-quarter 2019 results on Jul 26, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 15.56%. The bottom line also surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 16.9%.

Let’s see, how things are shaping up prior to this announcement.

Factors at Play

During most of the second quarter, PG&E Corp witnessed above-normal temperatures highlighted by warm weather conditions in its service territory. Moreover, it witnessed significant wet weather conditions led by above-average spring precipitation in California. Cumulatively, this indicates an increased use of electricity by its consumers for cooling purposes. This is likely to have driven the company’s to-be-reported quarter’s revenues.

In line with this, the Zacks Consensus Estimate for the top line is pegged at $4.3 billion, suggesting growth of 1.5% from the year-ago quarter’s reported figure.

On the flip side, higher financing expenses and incremental wildfire risk mitigation costs are expected to dent PG&E Corp’s earnings, going ahead. In fact, PG&E Corp has been incurring heavy expenditures associated with the 2018 Camp fire and the 2017 Northern California wildfires for the last few quarters. These expenditures include repair costs along with legal and other costs. Such costs are expected to persistently hurt the company’s bottom-line performance.

In line with this, the Zacks Consensus Estimate of earnings of 97 cents in the second quarter indicates a 16.4% decline from the year-ago quarter’s reported figure.

Earnings Whispers

Our proven model does not conclusively show that PG&E Corp is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Earnings ESP: PG&E Corp has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcement, especially when the company is seeing negative estimate revisions.

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Stocks to Consider

Here are a few players from the Utilities sector that have the right combination of elements to post an earnings beat this quarter.

Entergy Corporation ETR has an Earnings ESP of +1.40% and a Zacks Rank #2. The company is expected to release second-quarter 2019 results on Jul 31.

The Southern Company SO has an Earnings ESP of +0.46% and a Zacks Rank #3. The company is expected to release second-quarter results on Jul 31.

Clearway Energy, Inc. CWEN has an Earnings ESP of +15.0% and a Zacks Rank #1. The company is expected to release second-quarter results on Aug 6.

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