Why Did PG&E Stock Rally 75% Over The Last Week?

November 5th, 2019 by Trefis Team

California-based utility company PG&E (NYSE: PCG) saw its stock rally by around 75% over the last week, due to some positive developments in its bankruptcy process. While the company proposed a reorganization program that would retain some shareholder value, last month, a judge overseeing the proceedings indicated that an alternative plan from a coalition of bondholders and wildfire victims (which would likely wipe out any equity value) would also be considered, causing the stock to tank. However, last week, a mediator was brought on to facilitate the negotiations between the two competing factions. This is likely viewed as a positive sign by investors. It’s also possible that a part of the rally is being driven by short covering. PG&E filed for Chapter 11 bankruptcy protection in January, facing $30 billion in liability costs associated with the 2018 wildfires in Northern California. (Related analysis: PG&E Stock Tanks As Shareholders Expect Raw Deal From Rival Restructuring Plans) Below, we take a look at the company’s financial performance over the last few years and its outlook.

View our interactive dashboard analysis on Why Did PG&E Stock Rally Over The Last Week? 

How does PG&E’s Revenue Growth in 2018 compare with that in prior periods and what’s the forecast?

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Total Revenues for PG&E slightly decreased from $17.1 Bil in 2017 to $16.8 Bil in 2018; a decrease of 2.19%.

This compares with Total Revenues growth of:

  • -1.50% in 2015 compared to 2014
  • 4.95% in 2016 compared to 2015
  • -3.01% in 2017 compared to 2016

We expect Total Revenue growth to stand at 4.4% this year.

How does PG&E’s Total Expense in 2018 compare with that in prior periods and what’s the forecast?

Total Expense for PG&E substantially increased from $15.0 Bil in 2017 to $26.9 Bil in 2018; an increase of 79.7%, on account of wildfire-related claims, net of insurance recoveries, which stood at about $11 billion.

This compares with Total Expense growth of:

  • 4.43% in 2015 compared to 2014
  • 1.45% in 2016 compared to 2015
  • -7.65% in 2017 compared to 2016

We expect Total Expenses to decline to $15 billion this year.

How does PG&E’s EBT in 2018 compare with that in prior periods and what’s the forecast?

EBT for PG&E decreased dramatically from $2.17 Bil in 2017 to -$10.1 Bil in 2018. We expect EBT to decrease 1.64% to -$10.3 Bil in 2019.

How do PG&E’s Net Income and EPS in 2018 compare with that in prior periods and what’s the forecast?

Details about our estimates for PG&E’s Net Income and EPS are available in our interactive dashboard analysis.

 

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