雅虎香港財經 PSEG (PEG) Rides on Investments Despite Weak Financial Position
Public Service Enterprise Group, Inc. PEG or PSEG’s focus on renewable generation expansion is likely to enhance its performance. Moreover, to enhance customer reliability, the company makes consistent investments in its infrastructure, thereby strengthening its transmission and distribution system's resilience.
However, this Zacks Rank #3 (Hold) company faces risks like unfavorable financial position and expenditure to remediate every manufactured gas plant (MGP) site, which act as a headwind.
Tailwinds
PSEG has a capital investment plan of $18-$21 billion for 2024-2028 to constantly upgrade its infrastructure and expand its renewable generation portfolio. Its solid capital investment plan is estimated to bring in a compounded annual rate base growth of 6-7.5% between 2024 and 2028.
In the clean energy space, the company is investing significantly in solar initiatives, primarily in utility-owned solar photovoltaic (PV) grid-connected systems. As of Dec 31, 2023, the PSE&G segment owned 158 MW DC of installed PV solar capacity throughout New Jersey.
PSEG is also expanding its footprint in the wind energy market. In light of this, it is essential to note that the company has been granted various onshore transmission contracts by the New Jersey Board of Public Utilities in order to link customers with the offshore wind farms that are currently under development.
Headwinds
PSE&G has been collaborating with the New Jersey Department of Environmental Protection to assess and remediate environmental conditions at its former MGP sites. As of Mar 31, 2024, 38 sites require remedial action and PSE&G estimates costs of $204-$223 million to complete all sites. Such an expenditure might hurt PSEG’s operating results.
As of Mar 31, 2024, the company owed $18,764 million in long-term debt, which has been increasing steadily for the past three consecutive quarters. Then again, its cash balance of $1,186 million at the end of the first quarter fell short of its long-term debt levels and the current debt value of $2,500 million. This shows that PSEG has a weak solvency position.
Stocks to Consider
Some better-ranked stocks from the same industry are CenterPoint Energy CNP, IDACORP, Inc IDA and Consolidated Edison ED, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CenterPoint Energy’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for the company’s 2024 sales indicates an improvement of 1% from the prior-year reported figure.
IDACORP delivered an average earnings surprise of 6.81% in the last four quarters. The Zacks Consensus Estimate for IDA’s 2024 sales suggests an improvement of 1.1% from the prior-year reported figure.
Consolidated Edison’s long-term earnings growth rate is 7.4%. The Zacks Consensus Estimate for ED’s 2024 sales suggests an improvement of 3.1% from the prior-year reported figure.
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