PCG

Uncovering Key Insights on PG&E Stock

It hasn't been a great evening session for PG&E investors, who have watched their shares sink by -2.6% to a price of $17.78. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

The Market May Be Undervaluing PG&E's Assets and Equity:

PG&E Corporation, through its subsidiary, Pacific Gas and Electric Company, engages in the sale and delivery of electricity and natural gas to customers in northern and central California, the United States. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 20.35 and an average price to book (P/B) ratio of 2.27. In contrast, PG&E has a trailing 12 month P/E ratio of 15.9 and a P/B ratio of 1.48.

PG&E's PEG ratio is 1.36, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Negative Cash Flows:

2018 2019 2020 2021 2022 2023
Revenue (M) $16,759 $17,129 $18,469 $20,642 $21,680 $24,428
Operating Margins -57% -59% 10% 9% 8% 11%
Net Margins -41% -45% -7% 0% 8% 9%
Net Income (M) -$6,837 -$7,642 -$1,304 -$88 $1,814 $2,256
Net Interest Expense (M) $929 $934 $1,260 $1,601 $1,917 $2,850
Depreciation & Amort. (M) $3,036 $3,234 $3,468 $3,403 $3,856 $3,738
Diluted Shares (M) 517 528 126 1,985 2,132 2,138
Earnings Per Share -$13.25 -$14.5 -$1.05 -$0.05 $0.84 $1.05
EPS Growth n/a -9.43% 92.76% 95.24% 1780.0% 25.0%
Avg. Price $41.52 $14.97 $11.17 $10.87 $11.73 $17.78
P/E Ratio -3.13 -1.03 -10.64 -217.4 12.89 16.31
Free Cash Flow (M) -$1,762 -$1,497 -$26,820 -$5,427 -$5,863 -$4,967
CAPEX (M) $6,514 $6,313 $7,690 $7,689 $9,584 $9,714
EV / EBITDA -10.07 -1.72 8.29 12.65 14.28 14.0
Total Debt (M) $36,418 $1,500 $34,920 $42,706 $50,010 $52,351
Net Debt / EBITDA -5.21 0.01 6.59 8.02 8.66 8.07
Current Ratio 0.22 1.33 0.71 0.64 0.81 0.83

PG&E has negative cash flows, not enough current assets to cover current liabilities because its current ratio is 0.83, and a highly leveraged balance sheet. On the other hand, the company benefits from growing revenues and increasing reinvestment in the business and positive EPS growth. Furthermore, PG&E has weak operating margins with a stable trend.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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