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PG&E (PCG) Down 58.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for PG&E (PCG - Free Report) . Shares have lost about 58.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.

PG&E Corporation Q4 Earnings Miss, Revenues Down Y/Y

PG&E Corporation reported adjusted operating earnings per share of 68 cents in fourth-quarter 2019, which missed the Zacks Consensus Estimate of 77 cents by 11.7%. The bottom line, moreover, declined 15% from the year-ago quarter’s figure.

Including one-time items, the company incurred a GAAP loss of $6.84 per share compared with a loss of $13.24 in the prior-year quarter.

For 2019, PG&E Corp.’s adjusted operating EPS came in at $3.93 per share, down 1.75% from the prior-year quarter’s $4. The figure also missed the Zacks Consensus Estimate of $4.01 by 2%.

Revenue Update

PG&E Corp’s total revenues of $4,743 million surpassed the Zacks Consensus Estimate of $4,098 million by 15.7%. The top line also rose 18.6% from the year-ago quarter.

For 2019, PG&E Corp.’s revenues were $17,129 million, up 2.2% from the prior-year quarter’s $16,759 million. The figure also exceeded the Zacks Consensus Estimate of $16,610 million by 3.1%.

Operational Highlights

Total operating expenses at the end of December 31, 2019, totaled $27,223 million, which increased 2.9% from $26,459 million at the end of December 31, 2018. The increase was due to higher cost of natural gas, elevated operating and maintenance expenses and escalated depreciation, amortization and decommissioning expenses.

The company incurred operating losses of $11,042 million at the end of December 31, 2019, compared with operating losses of $10,129 million, registered at the end of December 31, 2018.

Interest expenses at the end of December 31, 2019, summed $934 million compared with $929 million in the year-ago period.

Five-year Financial Forecast

As a milestone in the process of emerging from Chapter 11 reorganization, PG&E is also releasing a five-year financial forecast highlighting capital and rate base growth along with other material drivers of the business, as well as filing three-statement financials with the Bankruptcy Court. The company remains on track to have its Chapter 11 Plan confirmed by June 30, 2020.

Guidance

PG&E Corp has not provided guidance for 2020 GAAP earnings and adjusted earnings from operations, due to the continuing uncertainty related to the 2018 Camp Fire, the 2017 Northern California wildfires, the Chapter 11 proceedings, and legislative and regulatory reforms.

PG&E Corporation is providing 2020 non-core items guidance of approximately $1.4 billion after-tax for Chapter 11-related costs, wildfire fund-related costs, investigation remedies and delayed cost recoveries, and GT&S capital audit.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months. The consensus estimate has shifted 54.54% due to these changes.

VGM Scores

Currently, PG&E has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Outlook

PG&E has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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