What Drove PG&E’s Third-Quarter Earnings?



Third-quarter earnings

PG&E (PCG) reported its third-quarter results on November 5. The company reported an adjusted EPS of $1.13 for the quarter ending on September 30. In the same quarter last year, the company earned $1.12 per share.

PG&E stock gained ~2.7% after its third-quarter earnings. So far in 2018, the stock has risen more than 8%, while the Utilities Select Sector SPDR ETF (XLU) has risen ~3%.

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Earnings highlights

PG&E reported total revenues of $4.38 billion in the third quarter—a fall of more than 3% year-over-year. PG&E’s total energy deliveries declined 4.6% in the third quarter—compared to the same quarter last year.

PG&E reported charges of $18 million during the third quarter associated with wildfires in the state. In the second quarter, the company incurred charges of $2.5 billion due to the wildfires.

California passed Senate Bill 901 in September, which strengthened the state’s ability to recover from wildfires. The bill helps pass utilities’ wildfire-related liabilities on to their customers through issuing bonds. CalFire blamed PG&E for staring some of the deadliest wildfires last year.

PG&E still hasn’t provided its operating earnings guidance for 2018 due to the uncertainty about wildfire-related charges. The company has suspended its dividends since the fourth quarter of 2017. PG&E intends to invest $5.7 billion–$7.0 billion per year, which will likely increase its rate base 7%–8.5% compounded annually through 2023.

To learn about utilities’ recent performances and where they might go from here, read S&P 500 Utilities: Last Week’s Outperformers and Underperformers.


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