Valued at a market cap of $41 billion, Oakland, California-based PG&E Corporation (PCG) is the parent company of Pacific Gas and Electric Company, California's largest regulated electric and gas utility. The company provides electricity and natural gas services to customers across northern and central California, generating power through a diverse mix of sources including nuclear, hydroelectric, and fossil fuels.
Shares of PCG have lagged behind the broader market over the past 52 weeks. PCG stock has declined 8.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 23.9%. On a YTD basis, shares of PCG are down 23.3%, compared to SPX's 3.7% gain.
Looking closer, the utility holding company has also underperformed the Utilities Select Sector SPDR Fund's (XLU) 26.4% return over the past 52 weeks and a 2.9% YTD gain.
Despite reporting weaker-than-expected Q3 revenue of $5.9 billion, shares of PG&E rose marginally on Nov. 7 as the company posted adjusted EPS of $0.37, which exceeded estimates and reflected a significant 54.2% year-over-year increase. Investors were also encouraged by improved operating income of $1 billion, driven by lower operating expenses and cost efficiencies. Additionally, the company provided a positive earnings outlook for 2025, with a guidance range of $1.47 per share - $1.51 per share, reinforcing confidence.
For fiscal 2024, which ended in December, analysts expect PCG's EPS to grow 10.6% year-over-year to $1.36. The company's earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 17 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 13 “Strong Buy” ratings, one “Moderate Buy,” and three “Holds.”
This configuration is slightly more bullish than three months ago, with 12 “Strong Buy“ ratings on the stock.
On Jan. 13, BMO Capital Markets initiated coverage on PG&E with an “Outperform“ rating and a $21 price target, citing a 9.2% projected EPS growth and 10% rate base expansion, aligning with PG&E’s long-term guidance. The firm sees PG&E as a deep value opportunity, with its price target implying a 20% discount and a potential total return of 23%.
As of writing, PCG is trading below the mean price target of $23.31. The Street-high price target of $26 implies a potential upside of 68.6%.
