Public Service Enterprise Group Inc (NYSE: PEG)

Sector: Utilities Industry: Utilities - Regulated Electric CIK: 0000788784
Market Cap 43.93 Bn
P/B 3.78
P/E 35.35
P/S 4.41
ROIC (Qtr) 6.24
Div Yield % 2.38
Rev 1y % (Qtr) 22.10
Total Debt (Qtr) 23.51 Bn
Debt/Equity (Qtr) 1.38
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About

Public Service Enterprise Group Inc., often recognized by its stock symbol PSEG, is a public utility holding company with a primary focus on regulated electric and gas utility operations in New Jersey. Established in 1985, the company's headquarters are located in Newark, New Jersey. PSEG operates through two wholly-owned subsidiaries, PSE&G and PSEG Power, each headquartered at 80 Park Plaza, Newark, New Jersey 07102. PSE&G is a franchised public utility in New Jersey, providing electric and gas distribution services to approximately 2.4 million...

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Investment thesis

Bull case

  • Tangible assets of 56.91B provide robust 28.50x coverage of other current liabilities 2B, indicating strong asset backing.
  • Operating cash flow of 2.94B provides strong 2.35x coverage of operating expenses 1.25B, showing operational efficiency.
  • Retained earnings of 13.45B represent substantial 0.79x of equity 17.01B, indicating strong internal capital generation.
  • Retained earnings of 13.45B provide strong 6.73x coverage of other current liabilities 2B, indicating earnings quality.
  • Tangible assets of 56.91B provide robust 11.36x coverage of current liabilities 5.01B, showing strong asset backing.

Bear case

  • Operating cash flow of 2.94B barely covers its investment activities of (3B), with a coverage ratio of -0.98, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 334M against inventory of 1.21B, the 0.28 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 2.94B provides thin coverage of dividend payments of (1.24B) with a -2.37 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (177M) provides weak coverage of capital expenditures of 3.12B, with a -0.06 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 3.24B show weak coverage of depreciation charges of 1.25B, with a 2.60 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Utilities - Regulated Electric
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NEE Nextera Energy Inc 191.44 Bn 28.01 6.98 95.62 Bn
2 SO Southern Co 97.42 Bn 30.98 4.46 73.75 Bn
3 AEP American Electric Power Co Inc 64.38 Bn 33.83 4.24 0.00 Bn
4 DUK Duke Energy CORP 56.47 Bn 30.61 3.87 89.65 Bn
5 EXC Exelon Corp 48.53 Bn 17.53 2.00 50.08 Bn
6 ETR Entergy Corp /De/ 45.74 Bn 25.29 3.59 30.45 Bn
7 PEG Public Service Enterprise Group Inc 43.93 Bn 35.35 4.41 23.51 Bn
8 XEL Xcel Energy Inc 41.10 Bn 37.21 3.75 35.52 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.91 1.01
EV to Cash from Ops. EV/CFO 16.46 12.45
EV to Debt EV to Debt 2.21 171.92
EV to EBIT EV/EBIT 21.15 19.12
EV to EBITDA EV/EBITDA 14.95 15.67
EV to Free Cash Flow [EV/FCF] EV/FCF 149.78 -28.25
EV to Market Cap EV to Market Cap 1.18 1.84
EV to Revenue EV/Rev 5.21 4.72
Price to Book Value [P/B] P/B 3.78 2.60
Price to Earnings [P/E] P/E 35.35 18.53
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.68 1.94
Dividend Payout Ratio % Div Payout % (Qtr) 59.60 62.23
Dividend per Basic Share Div per Share (Qtr) 2.49 2.02
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -701.41 -218.37
Interest Coverage Int. cover (Qtr) 3.32 2.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 6.84 -68.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 64.53 73.92
Dividend Growth (1y) % Div 1y % (Qtr) 5.06 4.05
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 7.23 15.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 10.49 13.33
EBIT Growth (1y) % EBIT 1y % (Qtr) 2.44 15.81
EBT Growth (1y) % EBT 1y % (Qtr) -2.12 19.29
EPS Growth (1y) % EPS 1y % (Qtr) 2.70 21.26
FCF Growth (1y) % FCF 1y % (Qtr) 79.75 -35.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.44 11.97
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.21 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.20 0.11
Cash Ratio Cash Ratio (Qtr) 0.07 0.98
Current Ratio Curr Ratio (Qtr) 0.93 2.72
Debt to Equity Ratio Debt/Equity (Qtr) 1.38 1.45
Interest Cover Ratio Int Coverage (Qtr) 3.32 2.83
Times Interest Earned Times Interest Earned (Qtr) 3.32 2.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 38.30 37.94
EBIT Margin % EBIT Margin % (Qtr) 27.62 316.94
EBT Margin % EBT Margin % (Qtr) 19.31 14.36
Gross Margin % Gross Margin % (Qtr) 35.60 41.20
Net Profit Margin % Net Margin % (Qtr) 17.80 12.57