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Can PG&E Corp (PCG) Spring a Surprise in Q4 Earnings?
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Utility company PG&E Corporation (PCG - Free Report) is set to report fourth quarter and full-year 2016 results, before the opening bell on Feb 16.
Last quarter, the company recorded a negative surprise of 14.55%. Moreover, the company missed the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being a negative 6.34%.
Let’s see how things are shaping up at the company prior to this announcement.
Factors at Play
PG&E Corp boasts a solid portfolio of regulated utility assets that offer a stable earnings base and substantial long-term growth potential. Also, steady growth in customer count is expected to bolster its top line while the company strives to boost margins by improving its cost structure, performance and reliability of nuclear and fossil fuel-fired units.
During the third quarter, PG&E Corp incurred a $4 million charge for the ex parte penalty associated with higher gas transmission revenues. The company expects to record an additional ex parte penalty of $54 million in the fourth quarter, if the proposed Phase 2 decision in relation to the gas transmission rate case, gets approved by the end of 2016.
However, in the event of failure to finalize this Phase 2 decision, the company’s earnings are expected to decline by 25 cents.
Moreover, the company's service territories witnessed above-average temperatures during the fourth quarter. This should translate into increased electric sales in these regions, which in turn, will boost the top line.
For the fourth quarter, the Zacks Consensus Estimate for earnings stands at $1.29, reflecting a 158.7% year-over-year improvement. On the other hand, the Zacks Consensus Estimate for revenues is pegged at $4.93 billion, reflecting an 18.43% year-over-year increase.
Earnings Whispers
Our proven model does not conclusively show that PG&E Corp is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: PG&E Corp has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.29. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PG&E Corp carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Here are a few players in the utility space which have the right combination of elements to post an earnings beat this quarter:
Pinnacle West Capital Corporation (PNW - Free Report) has an Earnings ESP of +2.04% and a Zacks Rank #2. The company is expected to release its quarterly figures on Feb 24.
Entergy Corporation (ETR - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. It is expected to report earnings on Feb 15.
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Can PG&E Corp (PCG) Spring a Surprise in Q4 Earnings?
Utility company PG&E Corporation (PCG - Free Report) is set to report fourth quarter and full-year 2016 results, before the opening bell on Feb 16.
Last quarter, the company recorded a negative surprise of 14.55%. Moreover, the company missed the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being a negative 6.34%.
Let’s see how things are shaping up at the company prior to this announcement.
Factors at Play
PG&E Corp boasts a solid portfolio of regulated utility assets that offer a stable earnings base and substantial long-term growth potential. Also, steady growth in customer count is expected to bolster its top line while the company strives to boost margins by improving its cost structure, performance and reliability of nuclear and fossil fuel-fired units.
During the third quarter, PG&E Corp incurred a $4 million charge for the ex parte penalty associated with higher gas transmission revenues. The company expects to record an additional ex parte penalty of $54 million in the fourth quarter, if the proposed Phase 2 decision in relation to the gas transmission rate case, gets approved by the end of 2016.
However, in the event of failure to finalize this Phase 2 decision, the company’s earnings are expected to decline by 25 cents.
Moreover, the company's service territories witnessed above-average temperatures during the fourth quarter. This should translate into increased electric sales in these regions, which in turn, will boost the top line.
For the fourth quarter, the Zacks Consensus Estimate for earnings stands at $1.29, reflecting a 158.7% year-over-year improvement. On the other hand, the Zacks Consensus Estimate for revenues is pegged at $4.93 billion, reflecting an 18.43% year-over-year increase.
Earnings Whispers
Our proven model does not conclusively show that PG&E Corp is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: PG&E Corp has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.29. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: PG&E Corp carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Pacific Gas & Electric Co. Price and EPS Surprise
Pacific Gas & Electric Co. Price and EPS Surprise | Pacific Gas & Electric Co. Quote
Stocks that Warrant a Look
Here are a few players in the utility space which have the right combination of elements to post an earnings beat this quarter:
Pinnacle West Capital Corporation (PNW - Free Report) has an Earnings ESP of +2.04% and a Zacks Rank #2. The company is expected to release its quarterly figures on Feb 24.
Portland General Electric Company (POR - Free Report) has an Earnings ESP of +1.56% and a Zacks Rank #2. It is slated to report earnings on Feb 17. You can see the complete list of today’s Zacks #1 Rank stocks here.
Entergy Corporation (ETR - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. It is expected to report earnings on Feb 15.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access.Click here for Zacks' private trades >>