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Why Is PSEG (PEG) Up 6.1% Since Last Earnings Report?

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It has been about a month since the last earnings report for PSEG (PEG - Free Report) . Shares have added about 6.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PSEG due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Public Service Enterprise Group Incorporated before we dive into how investors and analysts have reacted as of late

Public Service Enterprise Q4 Earnings Miss Estimates

Public Service Enterprise Group Inc., or PSEG, reported fourth-quarter 2020 adjusted operating earnings of 65 cents per share, which missed the Zacks Consensus Estimate of 66 cents by 1.5%. The bottom line however improved 1.6% on a year-over-year basis.

Including one-time adjustments, the company reported quarterly earnings of 85 cents per share compared with 86 cents in fourth-quarter 2019.

For 2020, the company reported adjusted operating earnings of $3.43 per share, which missed the Zacks Consensus Estimate of $3.44 by 0.3%. The full-year bottom line however improved 4.6% from a year ago.

Total Revenues

Revenues of $2,402 million in the quarter missed the Zacks Consensus Estimate of $2,696 million by 10.9%. Moreover, the figure declined 3.1% from the year-ago quarter’s $2,478 million.

For 2020, the company recorded revenues of $9.6 billion, which missed the Zacks Consensus Estimate of $9.69 billion by 0.9%. Moreover, the full-year top line declined 4.8% from the year-ago quarter figure of $10.08 billion.

Highlights of the Release

During the fourth quarter of 2020, the company reported operating income of $433 million, down from $507 million in the year-ago quarter. Total operating expenses were $1,969 million, down 0.21% from the year- ago quarter.

Interest expenses in the reported quarter were $147 million, compared to $152 million in the prior year’s quarter.

Segment Performance

PSE&G: Segment earnings were $291 million, up from $276 million in the prior-year quarter.

PSEG Power: Segment adjusted earnings were $55 million compared with $52 million in the prior-year quarter.

PSEG Enterprise/Other: Segment adjusted losses were $17 million against the adjusted earnings of $2 million in the prior-year quarter.

Financials

Cash, Cash Equivalents and Restricted Cash as of Dec 31, 2020 were $572 million compared with $176 million as of Dec 31, 2019.

Long-term debt was $16,180 million as of Dec 31, 2020, compared with $15,108 million at 2019 end.

At the end of 2020, cash from operating activities amounted to $3,102 million compared with $3,379 in the prior year.

2021 Guidance

The company issued its 2021 guidance. Adjusted earnings are projected to be $3.35-$3.55 per share. The Zacks Consensus Estimate for earnings is currently pegged at $3.38, lower than the mid-point of the company’s guided range.

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

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -12.9% due to these changes.

VGM Scores

At this time, PSEG has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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.


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