Public Service Enterprise Group (PEG) 25Q2 Update

Public Service Enterprise Group (PEG) reported 25Q2 operating revenues of $2.81 billion, up 15.8% from 24Q2, due to base rate increases which more than offset volume declines.  Diluted GAAP EPS was $1.17 vs. $0.87 last year.  My GAAP EPS estimate was $0.90.  25Q2 operating income surged 40.0%, as operating margin rose 510 bp.  The company recorded higher gains on its trust investments and derivatives; but these were partially offset by a big jump in its effective tax rate from 0.7% in 24Q2 to 19.4%.  Still, net income rose 34.8% to $585 million.  Those gains were attributed to exceptional items and excluded from non-GAAP earnings, so operating earnings per share, PEG’s non-GAAP measure, was $0.77 up 22% from $0.63 a year ago and below my estimate of $0.81.

Management reiterated 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 earnings growth is above its long-term operating earnings growth target of 5%-7%.  PEG is benefiting from a full year of higher PJM capacity payments, 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, the planned refueling outage in the fall at its Hope Creek nuclear plant and higher maintenance, interest and depreciation costs.

Based upon 25Q2 results, I am now projecting 2025 revenues of $11.75 billion, up 14.3% vs. 2024, GAAP EPS of $4.34 (up from $4.08 previously) and non-GAAP EPS of $4.01 (down from $4.06).  For 2026, my projections show revenues of $12.0 billion, up 1.7%, GAAP EPS of $4.61 (down from $4.67)  and non-GAAP EPS of $4.25 (down from $4.31).  My 2026 non-GAAP estimate equates to earnings growth of 6.0%.

Since my last report (6/15), the stock is up 8.3%, better than the S&P 500’s 6.9% advance and the DJUA’s 7.4% rise.  All of that outperformance has occurred since mid-July, as the stock rallied from an intraday low of $81.24 on July 16 to an intraday high of $91.25 on August 5, the day it reported earnings, before falling back to close last week at $87.68.

I am maintaining my price target of $86, which equates to one year forward multiples of 18.6 times projected 2026 GAAP EPS of $4.61 and 20.2 times projected 2026 non-GAAP EPS of $4.25.  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 18.2 times.  The $86 price target represents a potential total return of 1.0% from the current price of $87.68, including the stock’s 2.9% dividend yield.  I am therefore maintaining my performance rating of “3” (Neutral).

This is a summary of my recent update report on Public Service Enterprise Group (PEG). To obtain a copy of the report, please reach out to me using the contact information provided below.

August 13, 2025 (Report published on August 9, 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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