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Public Service Enterprise (PEG) Q2 Earnings Miss Estimates

Zacks Equity Research

Public Service Enterprise Group Inc. PEG, or PSEG, reported second-quarter 2019 adjusted operating earnings of 58 cents per share, which missed the Zacks Consensus Estimate of 62 cents by 6.4%. Moreover, the bottom line declined 9.4% on a year-over-year basis.

Excluding one-time adjustments, the company reported quarterly earnings of 30 cents per share compared with 53 cents in second-quarter 2018.
 
Total Revenues
 
Revenues of $2,316 million in the quarter exceeded the Zacks Consensus Estimate of $2,234 million by 3.7%. Moreover, the figure improved 14.9% from the year-ago quarter’s 2,016 million.

In the reported quarter, electric sales volumes were 9,335 million kilowatt-hours, while gas sales volumes declined 17% year over year to 575 million therms.

Under Electric sales, Residential sales volumes were 2,882 million kilowatt-hours, whereas Commercial and Industrial sales volumes accounted for 6,377 million kilowatt-hours. Other sales accounted for 76 million kilowatt-hours.
 
Total gas sales volumes witnessed a 14% decrease in non-firm sales volumes of gas and 19% decline in firm sales volumes of gas.
 
Highlights of the Release
 
During the second quarter of 2019, the company reported operating income of $160 million, down from $411 million in the year-ago quarter. Total operating expenses were $2,156 million, up 34.3 % from the year-ago quarter.
 
Interest expenses in the reported quarter were $137 million compared with $111 million in the year-ago quarter.

Public Service Enterprise Group Incorporated Price, Consensus and EPS Surprise

Public Service Enterprise Group Incorporated Price, Consensus and EPS Surprise

Public Service Enterprise Group Incorporated price-consensus-eps-surprise-chart | Public Service Enterprise Group Incorporated Quote

Segment Performance

PSE&G: Segment earnings were $227 million, down from $231 million in the prior-year quarter. PSE&G’s results in the quarter were driven by continued investment in its infrastructure programs, rate relief and an increase in its effective tax rate. However, weather conditions during the second quarter of 2019 were unfavorable compared to that in the year-ago period.
 
PSEG Power: Segment losses were $40 million against the segment income of $41 million a year ago. The downside can be attributed to re-contracting and market impacts along with lower realized margins.

PSEG Enterprise/Other: Segment losses were $34 million compared with losses of $3 million in the second quarter of 2018.

Financial Update

Long-term debt as of Jun 30, 2019, was $15,357 million, up from the 2018-end level of $14,462 million.

PSEG generated $1,824 million in cash from operations at the end of first-half 2019 compared to $1,633 million generated in the first half of 2018.

2019 Guidance
 
The company has reaffirmed its 2019 guidance. Adjusted earnings are projected to be $3.15-$3.35 per share.
 
PSE&G’s operating earnings are anticipated to be $1.200-$1.230 million. The company expects PSEG Power operating earnings to be $395-$460 million.
 
PSEG currently carries a Zacks Rank #4 (Sell).
 
Recent Utility Releases

American Electric Power Co., Inc. AEP, a Zacks Rank #3 (Hold) stock, reported second-quarter 2019 adjusted earnings per share (EPS) of $1.00, surpassing the Zacks Consensus Estimate of 98 cents by 2%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

NextEra Energy NEE, a Zacks Rank #3 stock, reported second-quarter 2019 adjusted earnings of $2.35 per share, beating the Zacks Consensus Estimate of $2.28 by 3.1%. Moreover, earnings were up 12.9% on a year-over-year basis.

CMS Energy Corporation CMS, a Zacks Rank #3 stock, reported second-quarter 2019 adjusted earnings per share (EPS) of 33 cents, down
32.7% year over year. The bottom line also missed the Zacks Consensus Estimate of 44 cents by 25%.

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