Public Service Enterprise Group Incorporated (PEG) Earnings & Analysis

Latest quarter

PSEG reported third-quarter revenue of $3.0 billion, below the $3.3 billion consensus and down from $3.2 billion a year earlier. Its adjusted earnings were $1.15 per share against the consensus estimate of $1.21. Diluted earnings per share fell to $0.75 from $1.24.

The filing attributed the decrease in net income primarily to mark-to-market losses, compared with gains a year earlier, and lower net gains on nuclear decommissioning trust investments. It said continued utility investment and higher capacity revenue at PSEG Power partly offset those effects. PSEG Power’s generation revenue fell, principally because of the mark-to-market changes, while higher capacity prices added revenue.

PSEG’s operating margin fell to 20.6% from 26.5% a year earlier. The company reported free cash flow of $716.0 million, compared with $322.0 million in the prior-year quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Daniel Cregg said PSE&G’s transmission and distribution margins increased from a year earlier, helped by investment; the distribution increase also reflected customer growth. He said higher depreciation and interest costs accompanied capital investment and borrowing, while the timing of taxes had an unfavorable quarterly effect.

Cregg explained that the utility’s conservation incentive program reduces the effect of weather and sales variations on much of its distribution margin. Under the program, he said, “it is the number of electric and gas customers that drives margin.” Residential electric customer growth was about 1% over the past 12 months, while gas customer numbers were flat, he said.

At PSEG Power and Other, Cregg said higher generation and capacity prices and gas operations lifted net energy margin, partly offset by the absence of Long Island fuel and energy management fees. He said the nuclear fleet produced approximately 8.2 TWh in the quarter at a 95.5% capacity factor.

On pricing, Cregg said the discount between the fleet’s PECO-zone price and the PJM Western hub had widened to about 30%, but “our hedge position has limited near term exposure to this pricing move.” He said PSEG Power had approximately 70 TWh of expected output sold forward as of September 30.

Responding to questions about market pricing, Cregg said he was watching the balance between new generation and demand, and had seen more announcements about demand than new generation. He declined to predict where markets would go or provide partial earnings guidance ahead of the company’s next outlook.

Cregg said PSE&G invested approximately $1.1 billion in the quarter in areas including infrastructure modernization. He said the company could execute its predominantly regulated five-year capital plan without issuing new equity or selling assets.

Guidance

Cregg said PSEG maintained its full-year 2026 non-GAAP operating earnings guidance and its five-year regulated capital investment plan. He said the company expects to introduce its 2027 earnings guidance and update its capital plan, rate-base growth and long-term earnings growth outlooks during its year-end call in February 2027.