PEG earnings preview: Analysts eye growth despite stock underperformance
New Jersey utility faces headwinds from rising costs and lower generation volumes, yet maintains a 'Moderate Buy' rating with average price target of $90.17
Public Service Enterprise Group (PEG), the New Jersey-based energy utility, is preparing to release its second-quarter fiscal 2026 earnings report. Wall Street analysts are forecasting diluted earnings per share of $0.83, which represents a 7.8 per cent increase from the $0.77 reported in the same quarter last year. This projection aligns with a broader outlook for continued earnings growth, with full-year fiscal 2026 EPS expected at $4.37 and fiscal 2027 at $4.69.
Despite these positive earnings forecasts and a history of beating analyst estimates in each of the past four quarters, PEG shares have underperformed the broader market and utilities sector benchmarks over the past year. Over the last 52 weeks, PEG slipped 2.4 per cent, compared to a 21.3 per cent rally in the S&P 500 Index and a 10.3 per cent gain in the State Street Utilities Select Sector SPDR ETF (XLU).
The divergence has become more pronounced in 2026. Year-to-date, PEG has posted a slight decline, while the S&P 500 advanced 10.6 per cent. PEG has also trailed the XLU, which gained 5.9 per cent year-to-date, leaving the utility stock playing catch-up within its sector.
The softer share price performance followed the company's latest quarterly update on Tuesday, May 5. Public Service Enterprise shares edged marginally lower as investors weighed stronger earnings against mounting costs. Q1 FY2026 net income climbed to $741 million, and adjusted operating earnings increased to $778 million. However, higher operation and maintenance expenses, rising depreciation, and larger interest costs tied to infrastructure investments tempered market enthusiasm.
Investors also monitored the PSEG Power segment, where lower generation volumes and the absence of zero-emission certificates offset benefits from higher realized power prices. Despite these near-term pressures, PEG retains a "Moderate Buy" rating from 23 analysts, with an average price target of $90.17, implying a 12.9 per cent potential upside.
