PG&E Corporation (PCG) is set to report third-quarter 2014 earnings results before the market opens on Oct 28, 2014. Last quarter, it had delivered a negative earnings surprise of 8%. Let us see how things are shaping up for this announcement.
Factors Affecting this Quarter
PG&E Corporation has an efficient portfolio consisting of regulated electric and gas utility operation. The company is primarily focused on expanding its presence locally and achieving greater success through an emphasis on planning and infrastructure development.
The company has already announced its upcoming spending plan called Pipeline 2020, a program with investments of several hundred billions of dollars spanning over a period of two to three decades. It is aimed at strengthening the company’s natural gas transmission system through a combination of targeted investments, power plant up-gradation, research and development, improved processes and procedures and tighter coordination with public agencies.
However, the cloud of the San Bruno accident continues to hover over the company. In Sep 2014, the company’s subsidiary, Pacific Gas and Electric Company was charged with $1.4 billion in fines and penalties associated with the 2010 San Bruno natural-gas pipeline explosion. As of Jun 30, 2014, the company had already incurred approximately $2.6 billion of cumulative charges following the accident. These costs may escalate further, thereby impacting the company’s financials negatively.
Earnings Whispers?
Our proven model does not conclusively show that PG&E Corporation is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: PG&E Corporation has an ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.15 per share, making the difference 0.00%.
Zacks Rank: PG&E Corporation’s Zacks Rank #3 increases the predictive power of ESP. However, the company’s ESP of 0.00% makes a surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Consolidated Edison, Inc. (ED) has Earnings ESP of +2.80% and a Zacks Rank #2.
Dynegy Inc. (DYN) has Earnings ESP of +260.00% and a Zacks Rank #2.
The Empire District Electric Company (EDE) has Earnings ESP of +8.89% and a Zacks Rank #2.
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