Public Service Enterprise Group Inc. or PSEG (PEG) reported second-quarter 2010 operating earnings per share (EPS) of 65 cents, ahead of the Zacks Consensus Estimate of 64 cents and the year-ago result of 63 cents. On a reported basis, including one-time items, earnings came in at 44 cents in the reported quarter, compared with 61 cents a year earlier.

The 21-cent variance between the reported and adjusted earnings came from the impact of Market Transition Charge Refund (14 cents), loss on Mark-to-Market (9 cents), partially offset by Gain (Loss) on Nuclear Decommissioning Trust Fund Related Activity (2 cents).

Operational Performance

Revenues dropped $105 million in the reported quarter to $2.5 billion from $2.6 billion in the year-ago period, falling behind the Zacks Consensus Estimate of $2.9 million. Operating Income was $437 million, compared to $637 million in the year-ago period. Overall net Income for the reported quarter was $224 million, compared to $311 million for the year-ago period.

Segmental Operational Performance

PSEG Power

PSEG Power reported operating earnings of $239 million (47 cents per share), compared with operating earnings of $253 million (50 cents per share) in the year-ago period.

PSE&G

PSE&G reported operating earnings of $75 million (15 cents per share), compared with operating earnings of $43 million (9 cents per share) for the second quarter of 2009.

PSEG Energy Holdings

PSEG Energy Holdings reported operating earnings of $12 million (2 cents per share) for the second quarter of 2010 versus operating earnings of $21 million (4 cents per share) during the second quarter of 2009.

Other Items

Lower interest cost added a cent to the year-over-year EPS variance.

Financial Condition

Public Service reported $520 million in cash from operating activities in the first half of fiscal 2010, compared with $789 million in the year-ago period. Cash and cash equivalents at the end of the reported period was $57 million, compared with $393 million at the end of the year-ago period. Total debt increased to $9.1 billion, compared with $8.7 billion at fiscal-end 2009.

Outlook

Public Service reaffirmed its fiscal 2010 EPS guidance range of $3.00 – $3.25.

We maintain our market Neutral recommendation on this Zacks #3 Rank (‘Hold’) stock.

 
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