PG&E Corporation (PCG) Q2 Earnings: What's In The Cards?

Utility company PG&E Corporation (NYSE:PCG) is set to release second-quarter 2016 results on Jul 28, before the opening bell. In the preceding quarter, the company had delivered a positive earnings surprise of 7.89%. Let’s see how things are shaping up for this announcement.

PG&E CORP Price and EPS Surprise

PG&E CORP Price and EPS Surprise | PG&E CORP Quote

Factors at Play

PG&E Corp.’s shares have been on the rise ever since the company declared impressive results for the first quarter of 2016 on May 4. In fact, the company has beaten earnings estimates in three out of the last four quarters, with a positive average surprise of 7.12%. It continues to expect 2016 adjusted earnings from operations in the range of $3.65−$3.85 per share. In 2015, the utility posted earnings of $3.12 per share.

For the second quarter, the Zacks Consensus Estimate for earnings is 94 cents a share, reflecting an increase of 3.3% year over year.

PG&E Corp. continues to make systematic investments in gas-related projects and electric system safety and reliability. Also, consistent and steady growth in customer count should bolster the company’s top line.

The stock also has a healthy 3.01% yield and a comfortable 52.3% payout ratio, which leaves room for dividend expansion. In May, PG&E Corp. announced that it was raising its quarterly common stock dividend to 49 cents per share, a rise of 3.5 cents per share from the earlier payout.

A relatively hotter weather this April, May and June might boost its prospects in the to-be-reported quarter. California had April temperatures much above average.

Earnings Whispers

Our proven model does not conclusively show that PG&E Corporation will be able to pull a surprise 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 an earnings beat. That is not the case here as you will see below.

Zacks ESP: PG&E Corporation’s Earnings ESP stands at -5.32%. This is because the company’s Most Accurate estimate is 89 cents, whereas the Zacks Consensus Estimate is pegged at 94 cents.

Zacks Rank: PG&E Corporation currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

The combination of PG&E Corporation’s Zacks Rank #2 combined with a negative earnings ESP makes a surprise prediction difficult.

Stocks to Consider

Here are some companies in the sector you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

AES Corp. (NYSE:AES) has an Earnings ESP of +11.11% and a Zacks Rank #3. The company is scheduled to release second-quarter results on Aug 5.

NRG Energy, Inc. (NYSE:NRG) has an Earnings ESP of +53.33% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Aug 9.

CMS Energy Corp. (NYSE:CMS) has an Earnings ESP of +11.43% and a Zacks Rank #2. The company is scheduled to release second-quarter results on Jul 28.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>