PG&E Corporation (PCG) with earning per share (EPS) of 80 cents in the fourth quarter of fiscal 2009 comfortably beat the Zacks Consensus EPS estimate of 74 cents. It also scurried past the year-ago EPS of 70 cents. The uptrend was reflected in fiscal 2009 results, also where the EPS of $3.21 breezed past the Zacks Consensus Estimate of $3.17 and fiscal 2008 EPS of $2.95. The majority of the higher year-over-year earnings from operations results from additional revenues generated by new capital investments in the Utility’s infrastructure.
Estimate Revisions Trend
PG&E has witnessed a lone upward revision in earnings estimates from the 16 analysts covering the stock in fiscal 2010 over the last 30 days. PG&E expects its fiscal 2010 earnings in the range of $3.35 – $3.50 per share, in line with the Zacks Consensus Estimate of $3.40.
The consensus is yet to reflect the effects of stable fiscal 2009 results. Also the encouraging results in the fourth quarter of 2009 have prompted us to reaffirm a Buy rating (Zacks Rank # 2) in the short-term. We expect the stock to outperform the overall U.S. equity market over the next one to three months.
However, we expect PG&E to perform in line with the overall market and thus maintain our Neutral recommendation over the long-term horizon. The average surprise over the last 4 quarters remained negative at 0.71%. This implies that PG&E has fallen short of the Zacks Consensus Estimate by 0.71% on an average over the last 4 quarters.
Operational performance
San Francisco, California-based PG&E’s revenue however fell 8.4% to $13.4 billion in fiscal 2009 from $14.6 billion in fiscal 2008. The downside was due to lower Natural gas revenues which decreased to $3.1 billion in fiscal 2009 from $3.9 billion in fiscal 2008. This was partially offset by higher Electric revenues which rose to $10.3 billion in fiscal 2009 from $10.7 billion in fiscal 2008.
PG&E’s consolidated net income on GAAP basis for fiscal 2009 was $1.22 billion as compared to $1.34 billion in fiscal 2008. However fiscal 2008 earnings include the one-time benefits of a settlement of federal tax audits for years 2001-2004 which totaled $257 million.
Financial Condition
Cash and cash equivalents were reported at $527 million at fiscal-end 2009 from $219 million at fiscal-end 2008. The company reported $3.1 billion in cash from operating activities at fiscal-end 2009, compared to $2.8 million in the year-ago period. Long term debt increased to $10.4 billion at fiscal-end 2009 from $9.3 billion in the year-ago period.
Read the full analyst report on “PCG”
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