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Public Service (PEG) Rides on Investments, Rising Customer Base
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Public Service Enterprise Group Inc.’s (PEG - Free Report) (also known as PSEG) infrastructure investments, expanding customer base and focus on clean energy are expected to boost its earnings.
However, this Zacks Rank #3 (Hold) stock may suffer from supply chain disruptions and a weak solvency position.
Tailwinds
PSEG’s capital investment plan primarily focuses on infrastructure. For the 2023-2027 period, PSEG expects to invest $15.5-$18 billion, more than 90% of which will be directed to PSE&G, the company’s principal reportable segment.
PSEG’s Gas System Modernization Program (GSMP) is designed to significantly reduce gas leaks in its distribution system. In October 2023, the Board of Public Utilities approved a two-year extension of its current GSMP program to replace at least 400 miles of cast iron and unprotected steel mains and services in its gas system.
The extension provides for main replacement through December 2025, plus trailing services replacement and paving costs into 2026 and totals approximately $900 million of investment. This will further improve the reliability of the company’s services and assist it in expanding the customer base efficiently.
Apart from focusing on transmission and distribution infrastructure, PSEG targets to become a carbon-free energy infrastructure company. It aims to achieve net-zero carbon emissions by 2030. PSEG has invested $400 million over the past 10 years to promote clean energy in New Jersey.
Headwinds
PEG is working with the New Jersey Department of Environmental Protection to assess, investigate and remediate environmental conditions at its former manufactured gas plant sites. The company estimates that the cost to remediate all manufactured gas plant sites to completion could lie in the range of $205-$224 million. Such expenses may weigh heavily on its operating results. Risks related to disruptions in the global supply chain are a potential headwind for the company. PSEG also suffers from high long-term debt and insufficient cash balance.
Stocks to Consider
Some better-ranked utilities in the same industry are NRG Energy Inc. (NRG - Free Report) , Consolidated Edison Inc. (ED - Free Report) and Entergy Corp. (ETR - Free Report) . NRG sports a Zacks Rank #1 (Strong Buy) while ED and ETR carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NRG Energy’s long-term (three-to-five-years) earnings growth rate is 13.8%. The stock delivered an average earnings surprise of 4.73% in the last four quarters.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 2.7% from the previous year.
Entergy’s long-term earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 1.7% from the previous year.
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Public Service (PEG) Rides on Investments, Rising Customer Base
Public Service Enterprise Group Inc.’s (PEG - Free Report) (also known as PSEG) infrastructure investments, expanding customer base and focus on clean energy are expected to boost its earnings.
However, this Zacks Rank #3 (Hold) stock may suffer from supply chain disruptions and a weak solvency position.
Tailwinds
PSEG’s capital investment plan primarily focuses on infrastructure. For the 2023-2027 period, PSEG expects to invest $15.5-$18 billion, more than 90% of which will be directed to PSE&G, the company’s principal reportable segment.
PSEG’s Gas System Modernization Program (GSMP) is designed to significantly reduce gas leaks in its distribution system. In October 2023, the Board of Public Utilities approved a two-year extension of its current GSMP program to replace at least 400 miles of cast iron and unprotected steel mains and services in its gas system.
The extension provides for main replacement through December 2025, plus trailing services replacement and paving costs into 2026 and totals approximately $900 million of investment. This will further improve the reliability of the company’s services and assist it in expanding the customer base efficiently.
Apart from focusing on transmission and distribution infrastructure, PSEG targets to become a carbon-free energy infrastructure company. It aims to achieve net-zero carbon emissions by 2030. PSEG has invested $400 million over the past 10 years to promote clean energy in New Jersey.
Headwinds
PEG is working with the New Jersey Department of Environmental Protection to assess, investigate and remediate environmental conditions at its former manufactured gas plant sites. The company estimates that the cost to remediate all manufactured gas plant sites to completion could lie in the range of $205-$224 million. Such expenses may weigh heavily on its operating results. Risks related to disruptions in the global supply chain are a potential headwind for the company. PSEG also suffers from high long-term debt and insufficient cash balance.
Stocks to Consider
Some better-ranked utilities in the same industry are NRG Energy Inc. (NRG - Free Report) , Consolidated Edison Inc. (ED - Free Report) and Entergy Corp. (ETR - Free Report) . NRG sports a Zacks Rank #1 (Strong Buy) while ED and ETR carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NRG Energy’s long-term (three-to-five-years) earnings growth rate is 13.8%. The stock delivered an average earnings surprise of 4.73% in the last four quarters.
Consolidated Edison’s long-term earnings growth rate is 2%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 2.7% from the previous year.
Entergy’s long-term earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2024 sales indicates an improvement of 1.7% from the previous year.