Public Service Enterprise Group Inc. (PEG) reported operating EPS of $3.12 in fiscal 2009 as compared to $3.03 in fiscal 2008 and Zacks Consensus EPS estimate of $3.18. In the fourth quarter however the company reported identical EPS of 62 cents compared to the year-ago quarter. This fell short by 16 cents as compared to the Zacks Consensus EPS estimate of 78 cents.
Revenue nose-dived 6.9% in fiscal 2009 to $12.4 billion from $13.3 billion in fiscal 2008. The downward trend was reflected in reported quarter also where revenue shrunk to $2.9 billion from $3.3 billion in the year-ago quarter.
Earnings Revisions Trend
Only 1 of 13 analysts covering the stock has revised downward fiscal 2010 EPS estimate in the last 30 days. However this doesn’t show the full picture since tepid fiscal 2009 results is yet to be factored in Zacks Consensus Estimate. As of now, fiscal 2010 Zacks Consensus EPS estimate is presently at $3.06. This is at the lower end of the company’s EPS projection of $3.00 – $3.25.
The average surprise over the last 4 quarters remained positive at 3.97%. This means that Public Service has topped the Zacks Consensus Estimate by 3.97% on an average over the last 4 quarters.
Going forward Public Service’s robust portfolio of regulated and non-regulated utility assets offers a steady earnings base and significant long-term growth prospect. The company remains focused on operational excellence, financial strength and disciplined investment.
Looking ahead, low-cost nuclear fleet, assumed rate relief and added generating capacities will drive the company’s earnings growth. However, the current adverse macro backdrop, volatility in coal prices, substantial pension and financial costs, and power-price volatility remain areas of concern. This justifies our neutral recommendation for the stock (Zacks #3 Rank).
Segmental Operational Performance
PSEG Power
PSEG Power reported operating earnings of $242 million in the reported quarter compared to $246 million in the year-ago quarter. In the reported quarter results were affected by weak power prices which more than offset an 8% increase in generation and lower fuel costs.
PSE&G
PSE&G reported operating earnings of $68 million in the reported quarter compared with operating earnings of $76 million in the year-ago quarter. Reported quarter results were affected by warmer weather and lower gas margins. This was partially offset by an increase in transmission rates and higher appliance service margin.
PSEG Energy Holdings
In the reported quarter PSEG Energy Holdings reported operating earnings of $12 million compared to operating earnings of $1 million in the year-ago quarter. Results in the reported quarter benefited from recognition of gains on the successful termination of two cross-border leveraged leases, lower operation and maintenance expenses and lower interest expense.
Financial Condition
Public Service reported $1.6 billion in cash from operating activities in fiscal 2009, compared to $1.2 billion reported in fiscal 2008. Cash and cash equivalents at the end of fiscal 2009 was $350 million compared to $321 million at fiscal-end 2008. Total debt reduced to $8.7 billion at fiscal-end 2009 compared to $9.1 billion at fiscal-end 2008.
Read the full analyst report on “PEG”
Zacks Investment Research
