Why Is PSEG (PEG) Down 6% Since Last Earnings Report?

·5 min read

A month has gone by since the last earnings report for PSEG (PEG). Shares have lost about 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 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 its most recent earnings report in order to get a better handle on the important catalysts.

PSEG Q4 Earnings Beat Estimates, Revenues Rise Y/Y

PSEG, reported fourth-quarter 2022 adjusted operating earnings of 64 cents per share, which beat the Zacks Consensus Estimate of 63 cents by 1.6%.

The company reported quarterly GAAP earnings per share (EPS) of$1.58 in the fourth quarter of 2022 compared to earnings of 88 cents generated in the fourth quarter of 2021.

For the full-year 2022, PEG’s adjusted operating earnings of $3.47 per share compared with $3.65 in the previous year’s quarter. Earnings beat the Zacks Consensus Estimate of $3.46 per share by 0.3%.

Total Revenues

Operating revenues came in at $3,139 million in the fourth quarter, which beat the Zacks Consensus Estimate of $2,179.4 million by 44%. The top line also increased by 2.7% from the year-ago quarter’s $3,056 million.

For the full-year 2022, PSEG reported operating revenues of $9.80 billion compared with $9.72 billion in the year-ago period. Operating revenues beat the Zacks Consensus Estimate of $8.84 billion by 10.9%.

In the quarter, electric sales volumes were 9,254 million kilowatt-hours, while gas sales volumes were 988 million therms.

Under electric sales, Residential sales volumes were 2,659 million kilowatt-hours, down 5% from the prior-year quarter figure. Its commercial and industrial sales volumes accounted for 6,498 million kilowatt-hours, registering growth of 4% from the same period last year.

Other sales were 97 million kilowatt-hours, down 2% from the year-ago quarter figure.

Total gas sales volumes witnessed an increase of 18% in firm sales volumes and a decrease of 9% in the non-firm sales volumes of gas from the year-ago quarter figure.

Highlights of the Release

In the fourth quarter of 2022, the operating income came in at $964 million compared with $902 million in the year-ago quarter.

Total operating expenses were $2,175 million, up 0.9% from the year-ago quarter.

Segment Performance

PSE&G:Net income was $352 million, up from $271 million in the prior-year quarter.

Carbon-Free Infrastructure/Other: Theadjusted operating loss was $34 million compared to operating earnings of $81 million in the prior-year quarter.

Financial Update

The long-term debt (including the current portion of the long-term debt) as of Dec 31, 2022 was $18,070 million, down from the 2021-end level of $19,438 million.

PSEG generated $1,503 million in cash from operations during the 12 months ended Dec 31, 2022 compared with the $1,736 million generated in the prior-year period.

2023 Guidance

The company updated its 2023 guidance. PEG now expects its adjusted operating earnings in the range of $1,700-$1,750 million and adjusted EPS in the range of $3.40-$3.50 compared with the prior range of operating earnings of $1,675-$1,775 million and EPS in the range of $3.35-$3.55. The Zacks Consensus Estimate for earnings is currently pegged at $3.43 per share, lower than the midpoint of the company’s guided range.

The company now expects its PSE&G adjusted operating earnings in the range of $1,500-$1,525 million compared with the prior range of $1,490-$1,540 million for 2023. It now anticipates Carbon-Free, Infrastructure & Other adjusted operating earnings in the range of $200-$225 million compared with the earlier guidance in the band of $185-$235 million.

How Have Estimates Been Moving Since Then?

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

VGM Scores

At this time, PSEG has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward 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.

Performance of an Industry Player

PSEG is part of the Zacks Utility - Electric Power industry. Over the past month, Southern Co. (SO), a stock from the same industry, has gained 2.3%. The company reported its results for the quarter ended December 2022 more than a month ago.

Southern Co. reported revenues of $7.05 billion in the last reported quarter, representing a year-over-year change of +22.2%. EPS of $0.26 for the same period compares with $0.36 a year ago.

Southern Co. is expected to post earnings of $0.79 per share for the current quarter, representing a year-over-year change of -18.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -6%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Southern Co. Also, the stock has a VGM Score of F.

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