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Why Is PSEG (PEG) Up 3.5% Since Last Earnings Report?

It has been about a month since the last earnings report for PSEG (PEG). Shares have added about 3.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PSEG 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 catalysts.

PSEG Q3 Earnings Beat Estimates, Revenues Rise Y/Y

PSEG reported third-quarter 2022 adjusted operating earnings of 86 cents per share, which beat the Zacks Consensus Estimate of 84 cents by 2.4%.

The company reported quarterly GAAP earnings per share (EPS) of 22 cents in the third quarter of 2022 against a loss of $3.10 generated in the third quarter of 2021.

Total Revenues

Operating revenues came in at $2,272 million in the third quarter, which beat the Zacks Consensus Estimate of $2,258.7 million by 0.6%. The top line also increased by 19.4% from the year-ago quarter’s $1,903 million.

In the quarter, electric sales volumes were 12,275 million kilowatt-hours, while gas sales volumes were 542 million therms.

Under electric sales, Residential sales volumes were 4,959 million kilowatt-hours, up 6% from the prior-year quarter figure. Its Commercial and Industrial sales volumes accounted for 7,244 and 4,959 million kilowatt-hours, respectively, registering growth of 1% and 6%, respectively, from the same period last year.

Other sales were 72 million kilowatt-hours, down 1% from the year-ago quarter figure.

Total gas sales volumes witnessed a decrease of 9% in firm sales volumes and 17% growth in the non-firm sales volumes of gas from the year-ago quarter figure.

Highlights of the Release

In the third quarter of 2022, the operating income came in at $173 million against the operating loss of $2,205 million in the year-ago quarter.

Total operating expenses were $2,099 million, down 48.9% from the year-ago quarter.

Segment Performance

PSE&G: Operating earnings were $399 million, up from $389 million in the prior-year quarter.

Carbon-Free Infrastructure/Other: The operating loss was $285 million compared with $1,953 million in the prior-year quarter.

Financial Update

The long-term debt (including the current portion of the long-term debt) as of Sep 30, 2022 was $17,675 million, up from the 2021-end level of $15,919 million.

PSEG generated $701 million in cash from operations during the nine months ended Sep 30, 2022 compared with the $1,178 million generated in the prior-year period.

2022 Guidance

PEG updated its 2022 guidance. It now expects adjusted operating earnings in the range of $1,705-$1,755 million and adjusted EPS in the range of $3.40-$3.50 compared with the prior range of operating earnings of $1,680-$1,780 million and EPS in the range of $3.35-$3.55. The Zacks Consensus Estimate for earnings is currently pegged at $3.46 per share, higher than the midpoint of the company’s guided range.

The company now expects its PSE&G adjusted operating earnings in the range of $1,545-$1,575 million compared with the prior range of $1,510-$1,560 million for 2022.

It now anticipates Carbon-Free, Infrastructure & Other adjusted operating earnings in the range of $160-$180 million compared with the earlier guidance in the band of $170-$220 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -11.56% due to these changes.

VGM Scores

Currently, PSEG has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PSEG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

PSEG is part of the Zacks Utility - Electric Power industry. Over the past month, American Electric Power (AEP), a stock from the same industry, has gained 6.9%. The company reported its results for the quarter ended September 2022 more than a month ago.

AEP reported revenues of $5.53 billion in the last reported quarter, representing a year-over-year change of +20.1%. EPS of $1.62 for the same period compares with $1.43 a year ago.

AEP is expected to post earnings of $1.03 per share for the current quarter, representing a year-over-year change of +5.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for AEP. Also, the stock has a VGM Score of B.

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