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On Tuesday, BMO Capital Markets adjusted its price target for Public Service Enterprise Group Inc. (NYSE:PEG), a leading energy company, to $87.00, down from the previous target of $90.00. Despite this change, the firm kept its Market Perform rating on the stock steady.
Public Service Enterprise Group Inc. reported third-quarter earnings for 2024, which slightly exceeded expectations with a result of $0.90 per share against the $0.87 consensus and BMO's own estimate of $0.83. However, the company's financial performance was eclipsed by a recent regulatory decision. On Friday, the Federal Energy Regulatory Commission (FERC) issued an order rejecting the third amended Interconnection Service Agreement (ISA) related to the company's Transmission Line (TLN) and Alternative Wholesale Solutions (AWS).
In response to the recent developments, management at Public Service Enterprise Group Inc. has refined its earnings forecast for 2024, narrowing the range to $3.64-3.68. This updated guidance aligns closely with BMO's and the consensus estimate of $3.66. Additionally, the company reaffirmed its commitment to a long-term earnings per share compound annual growth rate (CAGR) of 5-7%.
The company also emphasized its ongoing efforts to secure long-term contracts for its nuclear units, which could potentially be at higher prices. Any success in these negotiations would provide an incremental boost to the previously stated growth rate, according to the company's management.
BMO's revised price target of $87.00 is based on a mix of market trend and sum-of-the-parts (MTM/SOTP) valuation methods. The firm remains neutral on the stock with its Market Perform rating, as the company continues to navigate the challenges and opportunities ahead.
In other recent news, Public Service Enterprise Group (PSEG) reported robust Q3 2024 results, with earnings reaching $1.04 per share, a substantial increase from the $0.27 per share reported in the same quarter of the previous year. The company's non-GAAP operating earnings for Q3 2024 were $0.90 per share, compared to $0.85 per share in Q3 2023. PSEG also narrowed its full-year 2024 non-GAAP operating earnings guidance to $3.64 to $3.68 per share.
Among other recent developments, PSEG has resolved regulatory filings, including a rate case that will add $505 million in annual revenues. A $1.9 billion energy efficiency investment program was approved for 2025-2027. PSEG Power, a division of the company, reported a Q3 net income of $0.28 per share, a turnaround from a loss of $0.53 per share in Q3 2023.
The company is also pursuing opportunities in nuclear energy and contract renewals with LIPA, with updates expected in Q1 2025. PSEG reaffirmed a 5% to 7% long-term non-GAAP operating earnings growth target through 2028 and projected capital investment for 2024 at $3.5 billion.
InvestingPro Insights
Public Service Enterprise Group Inc. (NYSE:PEG) continues to demonstrate financial resilience despite recent regulatory challenges. According to InvestingPro data, the company boasts a market capitalization of $40.78 billion and a P/E ratio of 21.46, indicating investor confidence in its earnings potential.
InvestingPro Tips highlight PEG's commitment to shareholder value, noting that the company has raised its dividend for 12 consecutive years and maintained dividend payments for an impressive 54 consecutive years. This consistent dividend policy aligns with the company's reaffirmed long-term earnings growth target of 5-7% CAGR, as mentioned in the article.
The company's dividend yield stands at 2.93%, which may be attractive to income-focused investors, especially considering the company's track record of dividend growth. This is further supported by the 5.26% dividend growth observed in the last twelve months.
While the article discusses the recent regulatory setback and adjusted earnings forecast, it's worth noting that InvestingPro Tips indicate that 5 analysts have revised their earnings upwards for the upcoming period. This suggests that despite short-term challenges, there's optimism about PEG's future financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for PEG, providing deeper insights into the company's financial health and market position.
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