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 0.92%, juxtaposed with a three-month change of 13.75%. 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: 2/10
- GF Value rank: 5/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned PG&E Corp the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding PG&E Corp Business
PG&E Corp, a holding company, primarily operates through its main subsidiary, Pacific Gas and Electric. This regulated utility serves 5.3 million electricity customers and 4.6 million gas customers across 47 of California's 58 counties. Notably, PG&E operated under bankruptcy court supervision from January 2019 to June 2020. In 2004, PG&E sold its unregulated assets as part of an earlier post-bankruptcy reorganization. With a market cap of $54.32 billion and sales of $24.78 billion, PG&E maintains an operating margin of 19.03%.
Financial Strength Breakdown
PG&E Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The interest coverage ratio of 1.5 positions it worse than 84.04% of 445 companies in the Utilities - Regulated industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. Additionally, the company's Altman Z-Score of just 0.56 suggests potential financial distress. The low cash-to-debt ratio at 0.02 and a high debt-to-equity ratio of 2.31 further indicate over-reliance on borrowing.
Growth Prospects
A lack of significant growth is another area where PG&E Corp seems to falter. The company's revenue has declined by an average of 8% per year over the past three years, underperforming 93.37% of 483 companies in the Utilities - Regulated industry. Additionally, PG&E Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
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 seeking more robust investment opportunities may consider exploring other companies with stronger GF Scores.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
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.
