PEG Beats Top and Bottom Lines - Analyst Blog
August 03 2011 - 12:46PM
Zacks
Public Service Enterprise Group Inc. (PEG) or
PSEG, reported second quarter 2011 operating
earnings per share of 59 cents, comfortably beating the Zacks
Consensus Estimate by 4 cents. However, earnings came in lower than
the year-ago figure of 63 cents.
In the reported quarter, GAAP EPS was 63 cents, up from 44 cents
in the year-ago period. The variance between GAAP and operating
earnings was due to a gain of 3 cents on a Nuclear Decommissioning
Trust (‘’NDT’’) Fund Related Activity and a mark-to-market gain of
1 cent.
Operational Performance
Revenue in the reported quarter was $2.5 billion, up from the
year-ago figure of $2.4 billion. The top-line was also $108 million
above the Zacks Consensus Estimate.
Public Service Enterprise Group generated operating income of
$621 million compared with $431 million in the second quarter of
2010. Net income for the reported quarter however declined to $301
million from $321 million in the year-ago period.
Segment Performance
PSEG Power: Segment operating earnings were
$186 million in the quarter versus $229 million in the prior-year
period. The results reflect a decline in realized energy and
capacity prices, increase in customer migration, higher
depreciation expense, and greater operation and maintenance
expense. However, this was partially offset by a decline in trading
related losses.
PSE&G: The segment generated operating
earnings of $105 million versus $75 million in the year-ago quarter
driven by rate relief and improved returns on higher levels of
capital investment and a decline in operating and maintenance
expense. This was, however, partially offset by an increase in
depreciation expense.
PSEG Energy Holdings: Segment operating
earnings were $5 million compared with $12 million the prior-year
period. The downside reflects the absence of tax benefits
recognized in the prior-year quarter associated with the start-up
of solar projects in Ohio and Florida.
Outlook
Public Service reaffirmed its fiscal 2011 earnings per share
guidance range of $2.50–$2.75. However, it increased its capital
expenditure plan to $6.9 billion for the period 2011 through 2013
versus its previous expectation of $6.7 billion.
At the Peer
Yesterday, one of PSEG's competitors, FirstEnergy
Corp. (FE) announced second-quarter 2011 operating
earnings of 65 cents per share, falling short of the Zacks
Consensus Estimate of 74 cents per share and year-ago earnings of
82 cents per share.
Our Take
Public Service Enterprise Group’s investment program and
operational excellence position it as a reliable supplier of
low-cost, clean energy over the long term. Going forward, the
company’s earnings growth will be driven by a low-cost nuclear
fleet, assumed rate relief and added generating capacities.
However, the increasing cost of coal, higher pension and
financial costs, power-price volatility and challenges from the
Internal Revenue Service are areas of concern. Therefore, the
company presently retains a short-term Zacks #3 Rank (Hold) that
corresponds with our long-term Neutral recommendation on the
stock.
Public Service Enterprise Group, based in Newark, New Jersey, is
a diversified utility holding company. Its operations are mostly
located in the Northeastern and Mid-Atlantic parts of the
U.S. Public Service Enterprise principally operates through
three key subsidiaries: Public Service Electric and Gas Company
(PSE&G), PSEG Power LLC (PSEG Power) and PSEG Energy Holdings
LLC (PSEG Energy).
FIRSTENERGY CP (FE): Free Stock Analysis Report
PUBLIC SV ENTRP (PEG): Free Stock Analysis Report
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