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PG&E Corp (PCG) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

PG&E Corporation PCG is set to report first-quarter 2019 results on May 2, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 29.03%. The bottom line also surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.10%.

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

Factors at Play

During most of the first quarter, PG&E Corp witnessed colder-than-normal temperature in its service territory, indicating at an increased use of electricity by its consumers for heating purpose. This in turn, is likely to boost the company’s quarterly revenues. In line with this, the Zacks Consensus Estimate for the top line is pegged at $4.19 billion, suggesting growth of 3.4% from the year-ago quarter figure.

On the flip side, the utility incurred expenditure of $681 million for clean-up and repair of its facilities, through Dec 31, 2018, with wildfire being the primary culprit. In February 2019, the company announced that the utility’s equipment might be the “probable” the source of the 2018 Camp Fire — the deadliest in California’s history. If found guilty, once again wildfire related costs and associated fines are expected to push up the company’s overall expenditure. Such costs may persistently hurt the company’s results and in turn impact its bottom-line performance. Notably, the Zacks Consensus Estimate of 90 cents for PG&E’s quarterly earnings indicates a 1.1% drop from the year-ago quarter number.

In addition, PG&E Corp has filed for bankruptcy at the onset of the first quarter. No doubt, this decision was made pertaining to the company’s liabilities resulting from the 2017 and 2018 wildfires. We can expect the soon-to-be-reported results to give us further insight into this matter.

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Earnings Whispers

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

Earnings ESP: PG&E Corp has an Earnings ESP of -0.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: PG&E Corp has a Zacks Rank #3, which increases the predictive power of ESP but a negative Earnings ESP makes surprise prediction difficult.

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

Upcoming Utilities

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

Pinnacle West Capital Corp. PNW has an Earnings ESP of +1.41% and a Zacks Rank #2. The company is scheduled to report first-quarter results on May 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

PPL Corp. PPL has an Earnings ESP of +0.28% and a Zacks Rank #3. The company is scheduled to report first-quarter results on May 2.

Entergy Corp. ETR has an Earnings ESP of +3.99% and a Zacks Rank #2. The company is scheduled to report first-quarter results on May 1.

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