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Public Service Enterprise (PEG) Up 2.4% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Public Service Enterprise Group Incorporated (PEG - Free Report) . Shares have added about 2.4% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is PEG due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Public Service Enterprise Q1 Earnings Lag Estimates

Public Service Enterprise Group or PSEG delivered first-quarter 2018 adjusted operating earnings of 97 cents per share, which missed the Zacks Consensus Estimate by a penny. The bottom line, however, improved 5.4% from the year-ago quarter’s figure of 92 cents.

Excluding one-time adjustments, the company reported quarterly earnings of $1.10 per share, reflecting an improvement from 22 cents in first-quarter 2017.

Total Revenues

Revenues of $2,818 million in the quarter surpassed the Zacks Consensus Estimate of $2,740 million by 2.8%. The reported figure also rose 8.8% from the year-ago figure of $2,591 million.

During the reported quarter, electric sales volume inched up a mere 0.1% to 9,904 million kilowatt-hours, while gas sales volume dropped 0.9% to 1,430 million therms.

For electric sales, results reflected a 1.2% decline in the commercial and industrial sector, a 3.2% rise in residential sector, a 2.4% rise in street lighting and a 4.4% improvement in interdepartmental sector.

Total gas sales volume declined on 35% decrease in non-firm sales volume of gas, while firm sales volume of gas improved 9.2%.

Highlights of the Release

During the first quarter, the company reported operating income of $832 million compared with $178 million in the year-ago quarter. Total operating expenses were $1,986 million, down 17.7% from the prior-year quarter figure.

Interest expenses were $103 million compared with $98 million in the year-ago quarter.

Segment Performance

PSE&G: Segment earnings were $319 million, up from $299 million in the prior-year quarter.

PSEG Power: The segment earnings were $168 million, up from $150 million a year ago.

PSEG Enterprise/Other: The segment earnings increased $5 million compared with $17 million in the first quarter of 2017.

Financial Update

Long-term debt as of Mar 31, 2018 was $13,072 million, up from the 2017-end level of $13,068 million.

Public Service Enterprise generated $1,140 million in cash from operations in first-quarter 2018, down from the year-ago figure of $1,197 million.

2018 Guidance

The company reiterated its 2018 guidance. Adjusted earnings are still projected in the range of $3.00-$3.20.

PSE&G’s operating earnings are still anticipated in the range of $1,000-$1,030 million. The company continues to expect PSEG Power operating earnings guidance in $485-$560 million band.

Additionally, PSEG Enterprise/Other’s operating earnings expectations are still projected at $35 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.

VGM Scores

At this time, PEG has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

The company's stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, PEG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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