PG&E Corporation (PCG), headquartered in Oakland, California, sells and delivers electricity and natural gas to its customers. Valued at $52.2 billion by market cap, PCG is one of the largest utility companies in the U.S. that provides electricity and natural gas distribution, electricity generation, procurement, and transmission, and natural gas procurement, transportation, and storage.
Shares of this leading gas and electricity provider have underperformed the broader market considerably over the past year. PCG has gained 19.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 32.7%. In 2024, PCG stock is up 12.3%, compared to the SPX’s 21.2% rise on a YTD basis.
Narrowing the focus, PCG’s underperformance looks less pronounced compared to the Utilities Select Sector SPDR Fund (XLU). The exchange-traded fund has gained about 26.7% over the past year. The ETF’s 23.7% gains on a YTD basis outshine the stock’s returns over the same time frame.
The underperformance of PCG can be explained by increasing unrecoverable interest expenses. Concerns about financial strain have been exacerbated by ongoing costs related to wildfires and the amortization of wildfire fund liabilities, further highlighting the company's financial challenges and leading to investor caution.
On Jul. 25, PCG shares closed down more than 1% after reporting its Q2 results. Its adjusted EPS of $0.31 surpassed Wall Street expectations of $0.30. The company’s revenue was $6 billion, beating Wall Street forecasts of $5.8 billion. PCG reaffirmed its full-year adjusted EPS of between $1.33 and $1.37. It also reaffirmed its 2024 to 2028 financing plan.
For the current fiscal year, ending in December, analysts expect PCG’s EPS to grow 10.6% to $1.36 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 16 analysts covering PCG stock, the consensus is a “Strong Buy.” That’s based on 12 “Strong Buy” ratings, one “Moderate Buy,” and three “Holds.”
This configuration is more bullish than a month ago, with 11 analysts suggesting a “Strong Buy.”
On Oct. 23, RBC Capital analyst Shelby Tucker maintained a “Buy” rating on PCG with a price target of $24, implying a potential upside of 18.6% from current levels.
The mean price target of $23.33 represents a 15.3% premium to PCG’s current price levels. The Street-high price target of $26 suggests an upside potential of 28.5%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
