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Public Service (PEG) Tops Q4 Earnings, Revenues Drop Y/Y

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Public Service Enterprise Group Inc. (PEG - Free Report) or PSEG reported fourth-quarter 2016 adjusted operating earnings of 54 cents per share, which exceeded the Zacks Consensus Estimate of 52 cents by 3.8%. Earnings also improved 8% on a year-over-year basis, reflecting benefits from the company’s expanded investment program as well as continued growth in its regulated utility.

Excluding one–time adjustments, the company reported a quarterly loss of 19 cents per share, as against earnings of 60 cents at the end of fourth-quarter 2015.

During 2016, the company generated adjusted operating earnings of $2.90 per share, beating the Zacks Consensus Estimate of $2.88 by 0.7%. Earnings however declined by a penny from the year-ago equivalent.

Total Revenue

Revenues of $2,090 million in the reported quarter missed the Zacks Consensus Estimate of $2,288 million by 8.7% and also fell 8.3% from the year-ago figure of $2,278 million.

For 2016, the company recorded revenues worth $9,061 million, which missed the Zacks Consensus Estimate of $9,883 million by 8.3%. Revenues also declined 13% from the year-ago figure of $10,415 million.

During the reported quarter, electric sales volume increased 3% to 9,404 million kilowatt-hours while gas sales volume rose 6.9% to 1,046 million therms.

For electric sales, results reflected a 4.9% volume increase in the residential sector, a 2.2% rise in the commercial and industrial sector and 0.5% growth interdepartmentally. However, sales volume of street lighting dropped 1.9%.

Total gas sales volume in the reported quarter increased on a 31.6% rise in firm sales volume of gas despite a 24.9% decline in non-firm sales volume of gas.

Highlights of the Release

During the fourth quarter, the company incurred operating loss of $175 million as against operating income of $532 million in the year-ago quarter. Total operating expenses were $2,265 million, up 29.7% from the year-ago quarter figure.

Interest expenses in the reported quarter were $97 million, down 4.9% from the year-ago level.

Segment Performance

PSE&G: Segment earnings were $193 million, up from $156 million in the prior-year quarter. Quarterly results reflect growth from expanded investment in electric and gas transmission and distribution facilities.

PSEG Power: The segment suffered a loss of $302 million versus earnings of $149 million a year ago. The downside was due to the impact of incremental depreciation and other expenses of $555 million pre-tax associated with the decision to retire the Hudson and Mercer coal/gas-fired generating stations announced on Jun 1, 2017.

PSEG Enterprise/Other: The segment generated operating income of $11 million, compared with operating earnings of $4 million in the fourth quarter of 2015.

Financial Update

As of Dec 31, 2016, cash and cash equivalents were $423 million, compared with $394 million as of Dec 31, 2015.

Long-term debt as of Dec 31, 2016 was $11,395 million, up from the 2015-end level of $9,561 million.

Public Service Enterprise Group generated $3,311 million in cash from operations in 2016, down 15.5% from the year-ago figure.

2016 Guidance

The company provided its 2017 guidance. Earnings are projected in the range of $2.80–$3.00.

PSE&G’s operating earnings are expected in the range of $945–$985 million. The company also expects PSEG Power operating earnings in the $435–$510 million band.

PSEG Enterprise/Other’s operating earnings are estimated at $35 million.

Other Utility Releases

FirstEnergy Corp. (FE - Free Report) announced fourth-quarter 2016 operating earnings of 38 cents per share, missing the Zacks Consensus Estimate of 39 cents by 2.6%.Quarterly earnings were down 34.5% year over year.

Entergy Corp. (ETR - Free Report) reported fourth-quarter 2016 operational earnings of 31 cents per share, beating the Zacks Consensus Estimate of 11 cents by 181.8%. The reported number, however, declined 80.4% year over year.

CMS Energy Corp. (CMS - Free Report) reported fourth-quarter 2016 adjusted EPS of 29 cents, in line with the Zacks Consensus Estimate. Quarterly earnings, however, tanked 23.7% year over year.

Zacks Rank

Public Service Enterprise Group currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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