Is PG&E Stock Undervalued or Overvalued Before Earnings?
PG&E (NYSE: PCG) is a $23 billion company today. Investors that bought shares one year ago are sitting on a -27.45% total return. That’s below the S&P 500’s return of 26.85%.
PG&E stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
✗ Earnings-per-Share (EPS) Growth: PG&E reported a recent EPS growth rate of 38.96%. That’s below the electric utilities industry average of 190.79%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the electric utilities industry is 44.6. And PG&E’s ratio comes in at 9.84. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for PG&E stock is 94.31%. That’s below the electric utilities industry average of 112.89%. That’s a good sign. PG&E’s debt levels are not out of control.
✗ Free Cash Flow per Share Growth: PG&E has decreased its FCF per share over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✗ Profit Margins: The profit margin of PG&E comes in at 12.24% today. And generally, the higher, the better. We also like to see this ratio above competitors. PG&E’s profit margin is below the electric utilities average of 30.69%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for PG&E is 9.02% and that’s below its industry average ROE of 12.22%.
PG&E stock passes two of our six key metrics today. That’s why our Investment U Stock Grader gives it a Hold with Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing.
If you’re interested in finding Strong Buy stocks yourself, check out 3 Powerful Technical Indicators for Smarter Investing. We’ll show you how to eliminate emotional bias from your trading process with three powerful technical tools you can start using to boost your trading profits immediately. Click here to learn more.