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Is PG&E’s Discounted Valuation an Opportunity?

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Valuation

PG&E (PCG) stock nearly halved in the last few months. Currently, PG&E stock is trading at a significantly discounted valuation compared to the industry average and its historical valuation. PG&E is trading at an EV-to-EBITDA valuation of 6x—compared to its five-year historical average valuation of ~9x. Its peers (XLU) are trading at a valuation average of ~10.4x.

PG&E stock seems to be trading at a discount considering its PE (price-to-earnings) multiple. PG&E is trading at a PE multiple of 9x. Broader utilities’ (VPU) (IDU) average PE multiple is higher than 13x.

Investors might shun PG&E stock despite its significantly cheap valuation due to uncertainties associated with the utility and its recent dividend suspension.

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