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Why Is PG&E (PCG) Down 1.6% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for PG&E (PCG). Shares have lost about 1.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PG&E due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

PG&E Corporation Q2 Earnings Beat, Revenues Up Y/Y

PG&E Corporation reported adjusted operating earnings per share of $1.03 in second-quarter 2020, which surpassed the Zacks Consensus Estimate of 68 cents by 51.5%. The bottom line, however, declined 6.4% from the year-ago quarter’s reported figure.

Including one-time items, the company incurred a GAAP loss of $3.73 per share compared with a loss of $4.83 in the prior-year quarter.

Revenue Update

PG&E Corp’s total revenues of $4,533 million rose 15% from the year-ago quarter’s $3,943 million.
 
While electric revenues increased 16.6% from the prior-year quarter’s reported figure, natural gas revenues improved 10.1% year over year.

Operational Highlights

Operating expenses in the reported quarter totaled $4,251 million, which declined 43.9% from $7,583 million in second-quarter 2019. The decline was due to lower cost of electricity and wildfire-related claims.

The company reported an operating income of $282 million against the operating losses of $3,640 million incurred during the previous year’s second quarter.

Interest expenses in second-quarter 2020 summed $199 million compared with $60 million in the year-ago period.

2020 Guidance

PG&E Corporation issued 2020 guidance for consolidated GAAP losses of 99 cents to $1.05 per share, which includes non-core items.

On a non-GAAP basis, the guidance range for 2020 core earnings is $1.60-$1.63 per share. The Zacks Consensus Estimate for the company’s 2020 earnings, pegged at $1.32 per share, lies below the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 325.81% due to these changes.

VGM Scores

At this time, PG&E has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, PG&E has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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