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PG&E Corporation’s (PCG - Analyst Report) adjusted operating earnings per share of 54 cents in the first quarter of 2014 lagged the Zacks Consensus Estimate of 68 cents. The reported figure also trailed the year-ago number of 63 cents by 14.3%.

The uninspiring earnings reflect the negative impact of unrecovered costs in the natural gas business and an increase in outstanding shares.

GAAP earnings during the quarter were 49 cents versus 55 cents in the year-ago quarter. The variance between GAAP and pro forma earnings was due to a 5 cent charge related to natural gas assets.

Revenue Update

PG&E’s quarterly top line increased 5.9% to $3,891 million from $3,672 million in the year-ago period. Revenue also surpassed our expectation by 1.3%.

The Electric business generated revenues of $3,001 million in the quarter (up 7.2% year over year), while Natural Gas clocked revenues of $890 million (up 1.9%).


On the cost front, total operating expenses stood at $3,407 million, up 7.5% from the year-earlier level of $3,170 million. The rise was mainly due to the upswing in cost of electricity as well as natural gas.

At the Peer

Recently, American Electric Power Company Inc. (AEP - Analyst Report) reported first quarter 2014 operating earnings of $1.15 per share, beating the Zacks Consensus Estimate of 91 cents.

CMS Energy Corp. (CMS - Analyst Report) posted first-quarter 2014 earnings per share of 75 cents which exceeded the Zacks Consensus Estimate of 64 cents.

Public Service Enterprise Group Inc. (PEG - Analyst Report) posted first-quarter 2014 earnings per share of $1.01 per share. The quarterly figure outstripped the Zacks Consensus Estimate of 96 cents.

Zacks Rank

Although the company displayed mixed financial results in the first quarter 2014, we are hopeful that its constant gas and electric infrastructure upgrade efforts will lend stability to its earnings stream. Currently, PG&E carries a Zacks Rank #3 (Hold).

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