Public Service Enterprise Group (PEG) 25Q3 Update

Public Service Enterprise Group (PEG) reported 25Q3 operating revenues of $3.23 billion, up 22.1% from 24Q3, due once again to base rate increases which more than offset modest volume declines.  Diluted GAAP EPS was $1.24 vs. $1.03 last year.  My GAAP EPS estimate was $1.03.  25Q3 operating income surged 33.4%, as operating margin rose 220 bp to 26.5%.  The increase in operating income was partially offset by higher interest expense, lower gains on trust investments and an increase in the effective tax rate from 7.0% to 13.6%.  Net income rose 19.6% to $622 million.  Operating earnings per share, PEG’s non-GAAP measure, was $1.12 up 25.3% from $0.90 a year ago and above my estimate of $0.95.

Management narrowed its 2025 non-GAAP operating EPS guidance range to $4.00-$4.06 from $3.94-$4.06.  At the midpoint of $4.03, that represents a 9.5% increase over 2024 operating EPS of $3.68.  The expected earnings growth is above the long-term target of 5%-7%, which management reaffirmed.  PEG is benefiting from 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, a refueling outage at the Hope Creek nuclear plant and higher maintenance, interest and depreciation costs.

Based upon 25Q3 results, I am now projecting 2025 revenues of $12.1 billion, up 18.0% vs. 2024, GAAP EPS of $4.57 (up from $4.34 previously) and non-GAAP EPS of $4.09 (up from $4.01).  For 2026, my projections show revenues of $12.4 billion, up 1.0% vs. projected 2025, GAAP EPS of $4.49 (down from $4.61 in my previous report) and non-GAAP EPS of $4.38 (up from $4.25).  My 2026 non-GAAP estimate equates to earnings growth of 7.1%.

Since my last report (8/9), the stock has fallen 6.9%, worse than the gains of 18.4% in the S&P 500 and 8.9% in the DJUA.  A weekly chart shows that the stock has been in a steady, slow downtrend since November 2024.  Although it has shown signs of bottoming more recently, it took another leg down earlier this week before rebounding with the market on Friday.  A break below $75 would confirm the continuation of the downtrend.

I am maintaining my price target of $86, which equates to one year forward multiples of 19.2 times projected 2026 GAAP EPS of $4.49 and 19.7 times projected 2026 non-GAAP EPS of $4.38.  The non-GAAP valuation multiple is slightly higher than the stock’s current one-year forward multiple and above the peer group’s current forward multiple of 18.2 times.  The $86 price target represents a potential total return of 12.5%, including the stock’s 3.2% dividend yield.  Although I may be early, I am raising my performance rating from “3” (Neutral) to “2” (Outperform).

This is a summary of my recent 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.

January 12, 2026. (The date of the report is January 9, 2026.)

Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com

© 2015-2026 by Stephen P. Percoco, Lark Research.   All rights reserved.

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