Long-established in the Utilities - Regulated industry, PG&E Corp (PCG, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 2.15%, juxtaposed with a three-month change of -6.92%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of PG&E Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 3/10
- Profitability rank: 6/10
- Growth rank: 3/10
- GF Value rank: 5/10
- Momentum rank: 5/10
Based on the above method, GuruFocus assigned PG&E Corp the GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding PG&E Corp's Business
PG&E Corp, with a market cap of $43.4 billion and sales of $24.428 billion, operates primarily through its main subsidiary, Pacific Gas and Electric. This regulated utility serves 5.3 million electricity customers and 4.6 million gas customers across Central and Northern California. The company has navigated through bankruptcy court supervision from January 2019 to June 2020 and has a history of restructuring, including the sale of its unregulated assets in 2004. With an operating margin of 16.38%, PG&E Corp's financial health and growth prospects are critical for investors to consider.
Financial Strength Breakdown
PG&E Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 1.4 is lower than the industry standard, suggesting potential difficulties in managing interest expenses. Moreover, the Altman Z-Score of 0.46 indicates a risk of financial distress, and the low cash-to-debt ratio of 0.01 highlights challenges in debt management. The high debt-to-equity ratio of 2.31 and debt-to-Ebitda ratio of 7.92 further underscore the company's financial vulnerabilities.
Growth Prospects
PG&E Corp's growth trajectory is also a concern, as reflected by its low Growth rank. The company's revenue has declined by an average of 8% per year over the past three years, which is significantly below the industry average. This stagnation in revenue growth, coupled with a one-star predictability rank, adds to the uncertainty surrounding the company's future performance.
Next Steps
Considering PG&E Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and may want to explore other opportunities with stronger financial health and growth prospects. For those seeking to find more robust investment options, GuruFocus Premium members can utilize the GF Score Screen to discover companies with high GF Scores that may offer better long-term returns.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
