Morningstar

PG&E Earnings: Growth Continues Amid Key Regulatory and Policy Debates in California

PG&E’s biggest challenge is executing its investment plan and growing earnings while minimizing increases in customer bills.

A close-up of PG&E utility truck door with company logo.
Smith Collection/Gado via Getty
Securities in This Article
PG&E Corp
(PCG)

Key Morningstar Metrics for PG&E

  • Fair Value Estimate
    : $20.50
  • Morningstar Rating
    : ★★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : Medium

What We Thought of PG&E’s Earnings

PG&E PCG reported $0.43 adjusted earnings per share in the first quarter, up from $0.33 in the first quarter of 2025. Results are on track to meet our full-year estimate and management’s guidance.

Why it matters: Growth investments and operating cost savings continue to drive earnings growth.

  • PG&E management reaffirmed plans to invest $73 billion in 2026-30, one of the largest investment plans in the sector.
  • This plan supports our view that PG&E can achieve 9% annual earnings growth beyond 2028, as long as utility rate regulation in California remains constructive.

The bottom line: We are reaffirming our $20.50 fair value estimate for PG&E and our no-moat rating.

  • PG&E’s stock trades at an 18% discount to our fair value estimate, making it one of the cheapest US utilities we cover as of April 23.
  • Management’s 2026 EPS guidance range is $1.64-$1.66, in line with our estimate and implying 10% year-over-year growth.

Big picture: PG&E’s biggest challenge is executing its investment plan and growing earnings while minimizing increases in customer bills. PG&E must realize cost savings and pass those through to customers to get regulatory support for its growth plan.

  • PG&E reported 4.6 GW of data centers in its service territory in the engineering phase, and 1.8 GW could be online by 2030.
  • Management reaffirmed its 20% dividend payout ratio target by 2028. This gives PG&E flexibility to fund its capital investments and strengthen the balance sheet without issuing equity.

Coming up: The California Earthquake Authority’s wildfire risk policy recommendations published earlier this month could spur new legislation this summer. Changes to the state wildfire fund or the SB 254 continuation fund could impact shareholders.

  • Management plans to request regulatory approval for undergrounding 5,000 miles of electric lines in high fire-risk areas during the next 10 years, possibly boosting growth investment.
  • PG&E’s 2027-30 rate case hearings begin in May.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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