How Low Can PG&E Stock Go When The Risk Is Its Own?

PG&E (PCG) trades at about $12.94, the bottom of its 52-week range and about 32% below its high. Over the past twelve months it lost 12.2% while the S&P 500 gained 18.5%. That gap did not come from a market crash. And in market shocks since 2007, its deepest fall includes a one-day break in PG&E’s own price data.

What Has Changed For PG&E Since July?

PG&E serves customers across Northern and Central California. Its investment case has rested on a $73 billion capital plan through 2030 that management said needs no new equity. But the CFO said in July that the plan is premised on a constructive legislative outcome on wildfire liability.

The CEO went further. If the wildfire liability framework stayed unresolved or insufficient, the company would reevaluate its capital allocation priorities. The CEO would not say what that would look like.

In early September, PG&E said it would invest $11.4 billion in California in 2027 after deferring $2 billion of planned spending, and launch a strategic review of its business and financing. The plan management reaffirmed in July is now under review.

Is PG&E’s Business Actually Getting Worse?

Not on its own numbers. Revenue over the trailing twelve months is $25.84 billion, up 5.7%, in line with its 3-year average growth rate of 5.2%. The operating margin is 20.0%, above its 3-year average of 16.8%.

The grid is also safer: the CEO says PG&E is in its fourth year with no major fires linked to its equipment. The CFO says rating agency S&P upgraded its credit rating to one notch below investment grade, citing progress in reducing wildfire risk. Management puts its data center pipeline at over 12 gigawatts.

None of that settles who pays when a wildfire does happen. That is decided by the state legislature in Sacramento, and the company’s plan depends on the answer.

How Much Further Could PG&E Stock Fall In A Market Shock?

Across 15 market shocks since 2007, PG&E fell an average of 19% peak to trough, against 16% for the S&P 500. A crash has usually hit it about as hard as the market. The deepest clean case was the 2020 COVID-19 crash, when it fell 59% while the index fell 34%.

The deepest catalogued fall was 85%, from October 2018 to January 2019, while the index fell 19%. That window holds a one-day break in PG&E’s price, either a collapse or a corporate separation, so it is not a clean read of a market shock. The stock is still about 73% below its high from before that window.

Sized at 10% of a portfolio, that worst 85% fall would have cut about 9% of the whole.

Most recoveries have been quick. Of the falls it has fully recovered from, the median climb from the low back to the prior high took about 2 months. The exception was COVID, which took about 40 months. So a market shock is a risk you can size, though not always one you can wait out quickly. The one fall that never healed ran through PG&E’s own price break, and with its plan under review, position size is what a holder controls.

Could You Hold PG&E While Its Plan Is Under Review?

It turns on size more than nerve. How much of your money sits in this one utility? What would you sell if the review went badly?

Weighing that across many holdings is the job our High Quality Portfolio does.

And if the lower price is what tempts you, our Dip Buyer’s Playbook ranks which fallen names have the fundamentals to recover. The Trefis High Quality (HQ) Portfolio has a track record of outpacing the three major indices.