NEW YORK (TheStreet) -- Shares of PG&E Corp. (PCG - Get Report) are down -1.17% to $46.55 in pre-market trading after the utility company was downgraded to "sell" from "neutral" with a $44 price target at Goldman Sachs (GS).
The firm cited relative valuation and likely equity issuances.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 1.00, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that PCG's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
- PG&E CORP's earnings per share declined by 10.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PG&E CORP reported lower earnings of $1.84 versus $1.91 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $1.84).
- In its most recent trading session, PCG has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Multi-Utilities industry average. The net income has decreased by 5.0% when compared to the same quarter one year ago, dropping from $242.00 million to $230.00 million.
- You can view the full analysis from the report here: PCG Ratings Report