A month has gone by since the last earnings report for PG&E (PCG). Shares have added about 4.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PG&E due for a pullback? 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.
PG&E Corp. Q4 Earnings Top, Revenues Lag Estimates
PG&E Corporation reported adjusted operating earnings per share of 80 cents per share 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 tally.
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 probable cost recoveries of insurance premiums incurred in 2018.
Including one-time items, the company reported GAAP losses of $13.24 per share against the earnings of 22 cents per share 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 per share. The figure also surpassed the Zacks Consensus Estimate of $3.81 by 5%.
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 tally, 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%.
Total 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 the $417 million registered operating income 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 reflects 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 more than $30 billion.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -6.33% due to these changes.
Currently, PG&E has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
PG&E has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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