Will PG&E Corporation Benefit from Steady Investments?
On Nov 28, we have issued an updated research report on PG&E Corporation (PCG). Growth drivers for the company include its stable financial position, strong cash generating capacity, well-set utility assets, disciplined investments in infrastructure projects and a steadily growing customer count. However, penalties levied for the San Bruno and Carmel incidents, stringent utility regulations and several operational risks remain.
This San Francisco, CA-based company has a solid portfolio of regulated utility assets that offer a stable earnings base and substantial long-term growth potential. The company strives to optimize generation margins by improving its cost structure, performance and reliability of its nuclear as well as fossil fuel-fired units.
PG&E Corporation posted upbeat results in the third quarter of 2014, comfortably surpassing the Zacks Consensus Estimate for both revenues and earnings. The uptrend was primarily due to a favorable decision on the 2014 General Rate Case and an improved performance at Electric and Natural Gas segments.
However, a series of pipeline explosions at the company has tarnished its image. In Sep 2014, it was charged with $1.4 billion in fines and penalties associated with the 2010 San Bruno natural gas pipeline explosion and more recently one of its subsidiaries Pacific Gas and Electric Company was leveled a fine of $10.85 million for the Carmel natural gas explosion that occurred in Mar 2014.
Despite these issues, PG&E Corporation continues to make considerable progress on gas related commitments and achieving electric system safety and reliability. During the first nine months of 2014, the company invested $3.6 billion and plans to invest a total of $5.1 billion in 2014, including an allocation of about 40% towards its Electric Distribution segment and 20% towards Electric Transmission.
Going forward, the company plans to spend $15.8–$16.5 billion between 2014 and 2016 and projects a CAGR of 9% for the same period.
PG&E Corporation currently sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other well-placed stocks in the same industry include Black Hills Corporation (BKH), IdaCorp, Inc. (IDA) and Atlantic Power Corporation (AT). While Black Hills carries a Zacks Rank #1, IdaCorp and Atlantic Power hold a Zacks Rank #2 (Buy).
Read the Full Research Report on PCG
Read the Full Research Report on IDA
Read the Full Research Report on BKH
Read the Full Research Report on AT
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