What Does The Market Want From PG&E Stock?
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Management says the money PG&E (PCG) invests in its grid provides the main source of its earnings growth. Yet you probably know PG&E for wildfire risk, and the stock trades at 9.5 times earnings, against 22.8 for the S&P 500. That gap suggests investors want proof that PG&E can pay for that spending. So, is the grid spending still lifting PG&E’s earnings after the company trimmed its plan?
PG&E’s Earnings Growth Still Comes From Grid Spending
During the first nine months of 2026, PG&E’s core earnings per share, management’s own measure, rose to $1.24 from $1.14 a year earlier. Capital investment in the grid added 12 cents, exceeding the entire 10-cent rise.
PG&E did trim the program. Management cut $2 billion from the 2027 capital plan, citing high financing costs, and began notifying customers whose projects may be delayed. PG&E still expects to spend $11.4 billion in 2027. Management left its 2027 forecast unchanged for the rate base, the grid assets PG&E earns a return on. The company pointed in part to converting construction work in progress into rate base more efficiently. It also reaffirmed core earnings guidance of $1.64 to $1.66 per share for 2026 and $1.78 to $1.82 for 2027.
The latest quarter was weaker on a reported basis. PG&E’s net income fell to $776 million in the third quarter from $850 million a year earlier. Management said timing and other items, mainly a tax benefit booked in last year’s third quarter, took 4 cents off core earnings in the first nine months of 2026.
Can PG&E Pay For Its Grid Without New Shares?
Not so far. Management’s plan to avoid new shares through 2030 leans on more borrowing. Free cash flow was negative $4.98 billion over the past twelve months, and total debt rose to $65.5 billion from $59.8 billion a year earlier.
Management expects to fund its 2027 investment with cash from operations and $4 billion to $5 billion of utility debt. It says PG&E has already covered its expected equity needs through 2030, and that it would not issue shares at the current stock price. That promise matters to you, because PG&E’s diluted share count rose 6.8% in the three years to the third quarter of 2026.
Management said two topics are top of mind today: wildfire policy reform and its strategic review. It added that policy risk remains the main barrier to better credit ratings, and a rating agency moved its outlook on PG&E to negative during the quarter.
What PG&E’s Low P/E Does Not Show You
PG&E’s low P/E is based on the past year’s profit, which does not reflect the risk PG&E faces under California’s wildfire rules. Management said comprehensive wildfire reform has not been enacted, adding that action is needed to address the tail risk under the current framework. Its strategic review, meant to lower financing costs for customers, covers options that range from corporate ring fencing to sales and separations.
The next fight over spending has already started. PG&E filed a 10-year plan to put 5,000 more miles of power lines underground between 2028 and 2037, an investment of $16.6 billion. Management objected to a proposed method for weighing the plan’s costs and benefits, saying it would keep undergrounding from thousands of customers in high-risk communities. A commission vote could come as early as November 19.
Grid spending is still lifting PG&E’s core earnings, but the company is paying for it with borrowed money and management’s expectation that it needs no new shares through 2030. PG&E’s capital plan and its core earnings are the two figures to watch in its fourth-quarter report, expected in February 2027. Management expects to share the outcome of its strategic review no later than summer 2027.
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