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Why Is PG&E (PCG) Down 44.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for PG&E (PCG - Free Report) . Shares have lost about 44.9% in that time frame, underperforming the S&P 500.

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

PG&E Corporation Q3 Earnings Top, Revenues Lag Estimates

PG&E Corporation reported adjusted operating earnings per share of $1.13 in third-quarter 2018, which surpassed the Zacks Consensus Estimate of $1.12 by 0.9%. The bottom line also increased 0.9% from the year-ago quarter’s tally. This year-over-year upside can be attributed to growth in rate base earnings and probable cost recoveries of insurance premiums incurred in 2018.

Excluding one-time items, the company reported GAAP earnings of $1.09 per share compared with earnings of $10.7 generated in the prior-year quarter.

Revenue Update

PG&E Corp’s total revenues of $4,381 million missed the Zacks Consensus Estimate of $4,548 million by 3.7%. The top line also declined 3% from the year-ago quarter’s number.

While electric revenues decreased 5% from the prior-year quarter’s tally, natural gas revenues improved 5.3% year over year.

Operational Highlights

Total operating expenses in the reported quarter totaled $3,685 million, up 1.5% from $3,631 million in third-quarter 2017. Costs increased due to higher operating and maintenance expenses.

The company generated operating income of $696 million compared with $886 million registered in last year’s third quarter.

Interest expenses in third-quarter 2018 summed $232 million compared with $220 million in the year-ago period.

Guidance

PG&E Corp has not provided guidance for 2018 GAAP earnings and adjusted earnings from operations due to the uncertainty related to the Northern California wildfires in October 2017.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, PG&E has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, PG&E has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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