PG&E Corporation’s ( PCG - Analyst Report ) operating earnings per share of 59 cents in the fourth quarter of full year 2012 beat the Zacks Consensus Estimate of 58 cents. However this came below the year-ago number of 89 cents. On a reported basis, the company clocked loss per share of 3 cents compared with earnings of 20 cents in the year-ago quarter.

Full year 2012 operating earnings came in at $3.22 per share, beating the Zacks Consensus Estimate of $3.20. The reported figure was, however, lower than the full year 2011 earnings of $3.58 per share. On a reported basis, full year 2012 earnings were $1.92 per share versus full year 2011 earnings of $2.10 per share.

Full Year 2012 Revenue Update

PG&E’s revenue increased to approximately $15.04 billion in full year 2012 versus $14.96 billion in full year 2011, lower than the Zacks Consensus Estimate of $15.32 billion. Electric revenues rose year over year to $12.02 billion from $11.61 billion. Natural Gas revenues fell to $3.02 billion from $3.35 billion.

Guidance

PG&E affirmed its full year 2013 operating earnings guidance range of $2.55–$2.75 per share.

Outlook

Going forward, PG&E will continue to focus on investing new capital, consistent with California's focus on clean energy. The company is mandated by California’s renewable energy portfolio standard to raise its renewable generation. California’s renewable portfolio standard requires utilities to generate 33% of power from renewable sources by full year 2020.

We believe, going forward, favorable decisions from regulators, long-term supply contracts, diversification into alternative power sources and infrastructure improvement programs (such as Cornerstone and Smart Meter) will bode well for the company.

These positives, however, will be partially offset by risks, including the present tepid macro backdrop, headwinds in the California economy, earnings dilutive issuances and power-price volatility.

We have a Zacks Rank #3 (short-term Hold rating) on the stock. This implies that the stock is expected to perform lower versus the broader U.S. equity market over the next 1–3 months. Consequently, we advise investors not to take any position on the stock for the time being.

In the near-term, we would advise investors to focus on its Zacks Rank #1 (short-term Strong Buy rating) peers like Otter Tail Corporation ( OTTR - Snapshot Report ) , Pike Electric Corporation ( PIKE - Snapshot Report ) , and TransAlta Corp. ( TAC - Snapshot Report ) , all carrying a Zacks Rank #1 (Strong Buy).