Public Service (PEG)Tops Q3 Earnings, Lowers '16 EPS View

Public Service Enterprise Group Inc. (NYSE:PEG) , or PSEG, reported third-quarter 2016 adjusted operating earnings of 88 cents per share, beating the Zacks Consensus Estimate by 8.6%. Earnings also improved 10% on a year-over-year basis, reflecting the benefits from the company’s expanded investment program.

Excluding the one–time adjustments, the company’s reported quarterly earnings were 64 cents per share, down 26.4% from 87 cents a year ago.

Total Revenue

Revenues of $2,450 million in the reported quarter missed the Zacks Consensus Estimate of $2,543 million by 3.7%, and fell 8.8% from the year-ago figure of $2,688 million.

During the reported quarter, electric sales volume increased 3.6% to 12,792 million kilowatt-hours, while gas sales volume decreased 0.5% to 861 million therms.

For electric sales, results reflected a 7.2% volume increase in the residential sector, a 1.5% rise in the commercial and industrial sector, a 1.3% growth in street lighting and 4.8% growth interdepartmentally.

Total gas sales volume in the reported quarter decreased due to 7.5% drop in firm sales volume of gas. However, a 1.5% growth was observed in non-firm sales volume of gas.

PUBLIC SV ENTRP Price, Consensus and EPS Surprise

PUBLIC SV ENTRP Price, Consensus and EPS Surprise | PUBLIC SV ENTRP Quote

Highlights of the Release

Operating income tanked 29% year over year to $577 million in the quarter. Total operating expenses were $1,873 million, almost in line with the year ago quarter’s figure.

Interest expenses in the reported quarter were $99 million, up 3.1% from the year-ago level.

Segment Performance

PSE&G: Segment earnings were $255 million, up from $222 million in the prior-year period. Quarterly results reflect growth from expanded investment in electric and gas transmission and distribution facilities.

PSEG Power: The segment generated earnings of $139 million versus $206 million a year ago. The downside was due to the impact of the known decline in average prices on energy hedges and a decline in operating costs.

PSEG Enterprise/Other: The segment generated operating loss of $67 million, compared to operating earnings of $11 million in the third quarter of 2015.

Financial Update

As of Sep 30, 2016, cash and cash equivalents were $450 million, compared with $271 million as of Sep 30, 2015.

Long-term debt as of Sep 30, 2016 was $10,697 million, up from the 2015-end level of $9,568 million.

Public Service Enterprise Group generated $2,761 million in cash from operations in the first nine months of 2016, down 14.4% year over year.

2016 Guidance

The company lowered the higher limit of its earnings guidance. The company currently expects its earnings to be in the range of $2.80–$2.95, compared to the earlier earnings guidance range of $2.80–$3.00 per share.

PSE&G’s operating earnings are still expected in the range of $900–$935 million.

The company also continues to expect PSEG Power operating earnings in the $460–$525 million band.

PSEG Enterprise/Other’s operating earnings are still estimated to be $65 million.

Other Utility Releases

DTE Energy Company (NYSE:DTE) reported third-quarter 2016 operating earnings per share of $1.96, beating the Zacks Consensus Estimate of $1.54 by 27.3%. Reported earnings were also up 40% from the year-ago figure of $1.40.

Entergy Corporation (NYSE:ETR) reported third-quarter 2016 operating earnings of $2.31 per share, beating the Zacks Consensus Estimate of $1.95 by 18.5%. The reported number also improved 21.6% from $1.90 reported a year ago.

CMS Energy Corporation (NYSE:CMS) reported third-quarter 2016 adjusted earnings per share of 70 cents, beating the Zacks Consensus Estimate of 60 cents by 16.7%. Quarterly earnings also increased 32.1% from the year-ago figure of 53 cents.

Zacks Rank

Public Service Enterprise Group currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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