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Why Is PSEG (PEG) Down 1.4% Since Last Earnings Report?

·3 min read

A month has gone by since the last earnings report for PSEG (PEG). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.

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

Public Service Enterprise Q1 Earnings Top, Revenues Rise

Public Service Enterprise Group Inc., or PSEG, reported first-quarter 2021 adjusted operating earnings of $1.28 per share, which beat the Zacks Consensus Estimate of $1.13 by 13.3%. The bottom line also improved 24.3% on a year-over-year basis.

Including one-time adjustments, the company reported GAAP earnings of $1.28 per share compared with 88 cents in first-quarter 2020.

Total Revenues

Revenues of $2,889 million in the quarter missed the Zacks Consensus Estimate of $3,058 million by 5.5%. However, the figure rose 3.9% from the year-ago quarter’s $2,781 million.

Highlights of the Release

During the first quarter of 2021, the company reported an operating income of $741 million, down from $797 million in the year-ago quarter. Total operating expenses were $2,148 million, up 8.3% from the year-ago quarter.

Interest expenses in the reported quarter were $146 million compared with $153 million in the prior-year quarter.

Segment Performance

PSE&G: Segment earnings were $2,073 million, up from $1,883 million in the prior-year quarter.

PSEG Power: Segment earnings were $1,167 million compared with $1,220 million in the prior-year quarter.

PSEG Enterprise/Other: Segment losses were $351 million compared with loss of $322 million in the prior-year quarter.

Financials

Cash, cash equivalents and restricted cash as of Mar 31, 2021, were $841 million compared with $572 million as of Dec 31, 2020.

Long-term debt was $16,775 million as of Mar 31, 2021, compared with $16,180 million at 2020-end.

During the first quarter, PSEG generated cash from operating activities worth $1,027 million compared with $1,153 in the prior-year period.

2021 Guidance

The company reaffirmed its 2021 guidance. Its adjusted earnings are still projected to be in the range of $3.35-$3.55 per share. The Zacks Consensus Estimate for earnings is currently pegged at $3.44, slightly lower than the midpoint of the company’s guided range.

PSE&G’s operating earnings are anticipated to be $1,700-$1,800 million. The company also continues to expect PSEG Power operating earnings to be $280-$370 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, PSEG 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 second quintile 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision 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.


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