PG&E Corporation Faces Challenges Despite Strong Buy Ratings
PG&E Corporation (PCG), based in Oakland, California, is a major provider of electricity and natural gas, serving customers across the U.S. With a market valuation of $52.2 billion, it ranks among the largest utility companies in the country, offering services in electricity and natural gas distribution, generation, procurement, and storage.
However, PCG’s stock has not fared well against the broader market this past year. The company’s shares have risen just 19.8%, while the S&P 500 Index ($SPX) surged by nearly 32.7%. In 2024 alone, PCG stock has increased by 12.3% while the SPX has enjoyed a 21.2% rise year-to-date.
When compared to the Utilities Select Sector SPDR Fund (XLU), the underperformance of PCG is less severe. Over the past year, the ETF has increased by about 26.7%, with a year-to-date gain of 23.7%, demonstrating stronger returns than PCG.
The challenges faced by PCG include rising unrecoverable interest expenses. Ongoing liabilities from wildfires have compounded concerns about the company’s financial stability, which has led to hesitancy among investors.
After announcing its Q2 results on July 25, PCG shares fell over 1%. The company reported an adjusted earnings per share (EPS) of $0.31, slightly exceeding Wall Street’s estimate of $0.30. Revenues reached $6 billion, surpassing expectations of $5.8 billion. Furthermore, PCG reaffirmed its full-year adjusted EPS forecast of between $1.33 and $1.37, along with its financing plan for 2024 to 2028.
For its current fiscal year, ending in December, analysts project a 10.6% growth in PCG’s EPS, targeting $1.36 on a diluted basis. PCG’s record for meeting earnings expectations has varied; in three of the past four quarters, it exceeded estimates, while falling short on one occasion.
Among the 16 analysts monitoring PCG stock, the consensus rating is a “Strong Buy,” with 12 “Strong Buy” ratings, one “Moderate Buy,” and three “Holds.”
This outlook has become more positive compared to last month when only 11 analysts recommended a “Strong Buy.”
On October 23, analyst Shelby Tucker from RBC Capital maintained a “Buy” rating for PCG and set a price target of $24, suggesting a potential upside of 18.6% from current prices. The average price target of $23.33 indicates a 15.3% premium to today’s levels, while the highest target at $26 signals a potential upside of 28.5%.
More Stock Market News from Barchart
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 are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
