Public Service Enterprise Group (PEG) reported 25Q1 operating revenues of $3.22 billion, up 16.7% from 24Q1, due to base rate increases and higher volumes associated with the cold winter weather. Diluted GAAP EPS was $1.18 vs. $1.06 last year. My GAAP EPS estimate was $1.32. 25Q1 operating income rose 16.4%, in line with the increase in revenues. However, the gains in operating income were more than offset by other items, including lower gains on trust investments and higher interest expense. All of the increase in GAAP net income, therefore, was due to a decline in the effective tax rate from 15.4% to 4.5%. Operating earnings per share, a non-GAAP measure, was $1.43 vs. $1.31 a year ago and well above my estimate of $1.23.
Based upon 25Q1 results and its updated outlook, management is maintaining its 2025 non-GAAP operating EPS guidance range of $3.94-$4.06, which at the midpoint of $4.00 represents a 9% increase over 2024 non-GAAP EPS of $3.68. The expected improvement is well above the company’s long-term operating earnings growth target of 5%-7%. The company is benefiting from a full year of higher distribution base rates, returns on infrastructure modernization and energy efficiency expenditures and a higher base rate at PSE&G, which will be partially offset by the end of the New Jersey ZEC II nuclear subsidy, a planned refueling outage in the fall at its Hope Creek nuclear plant and higher maintenance, interest and depreciation costs.
Based upon 25Q1 results, I am now projecting 2025 revenues of $11.23 billion, up 9.2% vs. 2024, GAAP EPS of $4.08 (down from $4.36 previously) and non-GAAP EPS of $4.06 (up from $4.00). For 2026, my projections show revenues of $11.07 billion, down 1.5%, GAAP EPS of $4.67 (up from $4.56) and non-GAAP EPS of $4.31 (up from $4.20). My 2026 non-GAAP estimate equates to earnings growth of 6.1%.
Since my last report (4/26), the stock is flat, worse than the S&P 500’s 8.2% advance, but roughly in line with the DJUA’s 1.5% rise. Although the stock remains in a downtrend and underperformed both the broader market and peers up until the beginning of May, it has shown signs of bottoming and has performed in line with both since then. Based upon the recent trading pattern, I am maintaining my price target of $86, which equates to one year forward multiples of 18.5 times projected 2026 GAAP EPS of $4.67 and 20.0 times projected 2026 non-GAAP EPS of $4.31. The non-GAAP valuation multiple is equal to the stock’s current one-year forward multiple but above the current peer group’s one-year forward multiple of 17.1 times. (PEG’s high relative valuation has been and may continue to be a likely headwind.) The $86 price target represents a potential total return of 8.4% from the current price of $81.00, including the stock’s 3.1% dividend yield. I am therefore maintaining my performance rating of “3” (Neutral).
This is a summary of Lark Research’s recent report on Public Service Enterprise Group (PEG). To obtain a copy of the report, please reach out to Steve Percoco using the contact information provided below.
June 20, 2025 (Report published on June 16, 2025.)
Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com
© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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