PG&E Corporation Impresses With Q3 Report

The Pacific Gas and Electric Company, commonly known as PG&E Corporation (NYSE:PCG), is a San Francisco, California based business that provides natural gas and electricity to most of Northern and Central California.

PG&E In The News

PG&E Corporation released its third quarter financial results on Tuesday, October 28th, significantly surpassing analysts’ expectations. The company’s stellar earnings were attributed to the final decision in the 2014 General Rate Case, which was implemented for incremental revenues retroactive at the start of the year.

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PG&E Corporation Chairman, CEO and President Tony Earley said: “Operationally, we continued to make excellent progress during the quarter. This was exemplified by our team’s response to make the system safe and restore service during the Napa Valley earthquake in August. Improvements in our emergency planning and the use of data from our SmartMeter™ network supported our ability to respond quickly and effectively.”

In Its Q3 results, PG&E reported $1.73 earnings per share on a Non-GAAP basis, exceeding analysts’ expectations of $1.10 by $0.63. During the same quarter of last year, PG&E posted $0.88 earnings per share. The company earned revenue of $4.94 billion for the quarter, beating analysts’ consensus estimate of $4.68 billion. PG&E’s quarterly revenue was up 18.3% on a year-over-year basis. Analysts expect that PG&E will post $3.05 EPS for the current fiscal year.

A Financial Expert’s Opinion

On October 29th Deutsche Bank analyst Jonathan Arnold upgraded his rating for PG&E from Hold to Buy and raised his price target from $49.50 to $52.

In his report, Arnold noted, “PCG reported 3Q14 operating EPS of $1.73 versus our $1.21E and $1.12 consensus. Versus our estimate, lower taxes related to new IRS guidelines on repair deductions similar to what EIX has seen (+$0.18), timing-related tax and other expenses (+$0.17), GRC-related recoveries (+$0.05), and miscellaneous positives (+$0.08) were the drivers of the upside. The repair deduction benefit was triggered by the General Rate Case (GRC) decision during Q3 and is expected to continue (at some level) through the current rate period (2014-16).”

Arnold currently has an overall success rate of 73% recommending stocks and a +7.3% average return per recommendation.

Arnold has had his fair share of experience recommending energy stocks such as Edison International (EIX) and CMS Energy (CMS). He has rated Edison 9 times, earning an 89% success rate recommending the stock. He has rated CMS Energy 8 times with a 100% success rate.

However, Arnold has not always been correct with his recommendations. He rated NRG Yield Inc (NYLD) one time with 0% success.


PG&E’s Q3 report impressed analysts and investors alike. The company got Jonathan Arnold excited enough to upgrade his rating to a Buy.

On average, the top analyst consensus for PG&E is Moderate Buy.

To see more recommendations from Jonathan Arnold, visit TipRanks today!

Carly Forster writes about stock market news. She can be reached at