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Public Service Enterprise (PEG) Q4 Earnings Beat Estimates

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Avangrid (AGR) delivered earnings and revenue surprises of -17.50% and 3.74%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

Public Service Enterprise Group Inc. PEG, or PSEG, reported fourth-quarter 2018 adjusted operating earnings of 56 cents per share, surpassing the Zacks Consensus Estimate of 55 cents by 1.8%. The bottom line, however, slipped 1.8% on a year-over- year basis.


Excluding one-time adjustments, the company reported quarterly earnings of 39 cents per share compared with $1.88 per share in fourth-quarter 2017.


For 2018, PSEG’s adjusted operating EPS came in at $3.12, up 6.5% from the prior-year quarter’s $2.93. The figure also surpassed the Zacks Consensus Estimate of $3.11 by a penny.


Total Revenues


Revenues of $2,468 million in the quarter exceeded the Zacks Consensus Estimate of $2,359 million by 4.6%. Moreover, the figure improved 17.1% from the year-ago quarter’s figure of $2,107 million.

For 2018, PSEG’s revenues were $9,696 million, up 6.6% from the prior-year quarter’s $9,094 million. The figure, however, missed the Zacks Consensus Estimate of $9,790 million by 1%.


In the reported quarter, electric sales volumes increased 1.9% to 9,721 million kilowatt-hours, while gas sales volumes rose17.7% to 1,116 million therms.


For electric sales, results reflected 1.9% rise in the commercial and industrial sector, 1.7% in residential sector and 9.2% in other sector.


Total gas sales volumes declined on 60.8% surge in non-firm sales volumes of gas and  6.8% rise in firm sales volumes of gas.


Highlights of the Release


During the fourth-quarter of 2018, the company reported operating income of $501 million, up from $363 million in the year-ago quarter. Total operating expenses were $1,967 million, up 12.8% from the year-ago quarter.


Interest expenses in the reported quarter were $135 million compared with $102 million in the year-ago quarter.


Segment Performance


PSE&G: Segment earnings were $239 million, up from $220 million in the prior-year quarter. Quarterly results reflect new electric and gas rates put into effect on Nov 1, 2018,following the continued growth in earnings resulting from investment in Transmission and Distribution infrastructure.


PSEG Power: Segment losses were $35 million, against net income of $610 million a year ago. The downside can be attributed to increase in fuel costs, depreciation and interest expenses.


PSEG Enterprise/Other: Segment losses were $5 million, against earnings of $126 million in the fourth quarter of 2017.


Financial Update


Long-term debt as of Dec 31, 2018, was $14,462 million, up from the 2017-end level of $13,068 million.


PSEG generated $2,913 million in cash from operations at the end of 2018, down from the year-ago quarter’s $3,260 million.


2019 Guidance


The company has released 2019 guidance. Adjusted earnings are now projected to be $3.15-$3.35 per share.


PSE&G’s operating earnings are now anticipated to be $1.200-$1.230 million.


The company expects PSEG Power operating earnings of $395-$460 million.


Zacks Rank


PSEG 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. The reported figure also declined 27.8% from the year-ago quarter’s $1.26.


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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