PSEG Gears Up for Renewable Expansion Despite Financial Hurdles
Public Service Enterprise Group, Inc. (PEG or PSEG) aims to expand its presence in the clean energy market through a focus on renewable generation. To improve customer reliability, the company consistently invests in upgrading its infrastructure, enhancing the resilience of its transmission and distribution systems.
Positive Drivers for Growth
PSEG plans to allocate $18-$21 billion for capital investments between 2024 and 2028, aimed at continuous upgrades to its infrastructure and enhancing energy efficiency initiatives. This robust investment strategy is anticipated to yield compounded annual rate base growth of 6-7.5% during the same timeframe.
In the clean energy sector, PSEG is making significant investments in solar energy, focusing on utility-owned solar photovoltaic (PV) systems. As of December 31, 2023, the PSE&G segment had successfully installed 158 megawatts of direct current PV solar capacity across New Jersey.
The company is also venturing into wind energy. Notably, it has received several onshore transmission contracts from the New Jersey Board of Public Utilities to connect customers to offshore wind farms that are currently being developed.
Challenges Ahead for PSEG
The PSE&G segment is working closely with the New Jersey Department of Environmental Protection to evaluate and remediate conditions at certain former manufactured gas plant (MGP) sites. As of September 30, 2024, 38 of these sites are expected to require remediation, with projected costs ranging between $222 million to $246 million. These expenses could potentially impact PSEG’s operating results.
As of September 30, 2024, the company carries $18.96 billion in long-term debt. Its cash balance is just $0.20 billion, which is considerably lower than its long-term debt and current debt of $2.95 billion, indicating a weak solvency position for PSEG.
Performance of PEG Stock
In the last six months, shares of PEG have grown by 15.8%, outperforming the industry average growth of 7.9%.
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Stocks Worth Considering
Some better-ranked stocks in the same industry include IDACORP, Inc. (IDA), DTE Energy Company (DTE), and NiSource Inc. (NI), each currently holding a Zacks Rank #2 (Buy). You can explore the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDACORP’s long-term earnings growth rate stands at 8.3%, with an average earnings surprise of 4.33% over the last four quarters.
DTE has a long-term earnings growth rate of 8%, achieving an average earnings surprise of 8.89% in the past four quarters.
NiSource reports a long-term earnings growth rate of 7.5%, demonstrating an average earnings surprise rate of 22.43% in the last four quarters.
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NiSource, Inc (NI): Free Stock Analysis Report
Public Service Enterprise Group Incorporated (PEG): Free Stock Analysis Report
DTE Energy Company (DTE): Free Stock Analysis Report
IDACORP, Inc. (IDA): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
