Value
8.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.1 |
| P/S | 9.3 |
| EV/EBITDA | 6.5 |
| Fwd P/E | 9.7 |
| PEG | 9.8 |
| Analyst target | 7.5 |
- ▸Forward P/E: 7.3x
- ▸PEG: 0.54
- ▸Attractively valued
PCG · Why this verdict
Why Pacific Gas & Electric (PCG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Pacific Gas & Electric ranks as an industry growth leader for regulated utilities with rising earnings and 23% analyst upside at a forward P/E of 9.2x, though negative free cash flow of 196% relative to net income and heavy California geographic concentration temper the quality case.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite negative free cash flow at 196% relative to net income — a red flag — the strong Piotroski F-Score of 7/9 and 9.6% operating margin indicate the operating business is fundamentally sound even if capital expenditure-heavy investments temporarily depress cash flow. Quality breakdown | Free cash flow deficit narrows to below 100% of net income within 4 quarters as capital-intensive infrastructure projects begin generating returns. | ↓Deteriorating |
| CounterNegative FCF of this magnitude in a regulated utility reflects ongoing heavy capital spending that may not generate regulated returns for years; dividend sustainability depends entirely on the company's ability to raise external capital, which is sensitive to interest rate movements. | ||
Pacific Gas & Electric ranks as an industry growth leader among regulated electric utilities, trading at a forward P/E of 9.2x with 23% analyst upside to roughly $20.33 and a PEG ratio of 0.72 — pricing in below-average growth in a business that is growing above its sector peers. Peer-rank breakdown | Price rises above $19.00 within 12 months as earnings growth is recognized and the valuation discount narrows. | ↓Deteriorating |
| CounterPG&E carries a high debt-to-equity ratio with a leverage penalty, operates exclusively in Northern and Central California with concentrated wildfire liability, and negative free cash flow of 196% of net income undermines the earnings quality of the utility's reported results. | ||
PG&E has beaten earnings estimates in 2 of the last 4 quarters with average positive surprises of 9% and 17% in the beat quarters, demonstrating the regulated utility's ability to deliver earnings above the conservatively set utility estimates. Earnings | Earnings beat consensus by more than 5% in at least 2 of the next 4 quarters, sustaining the beat cadence. | ↓Deteriorating |
| CounterOne recent miss was negative 1.9% and the company has had an inline result; the utility earnings track record is uneven and may reflect the difficulty of forecasting regulatory cost recovery timing rather than operational outperformance. | ||
Pacific Gas & Electric trades above its 200-day moving average with a momentum score of 6.9 and rising on-balance volume, indicating buyers are sustaining the uptrend in the regulated utility space. Momentum breakdown | Price holds above the 200-day moving average for at least 6 consecutive months while on-balance volume trends upward. | ↑Improving |
| CounterThe technical picture is range-bound with RSI at 53 and Bollinger mid-band — positive but not strongly directional; a broader utility selloff driven by rate concerns could break the 200-day support quickly. | ||
Despite negative free cash flow at 196% relative to net income — a red flag — the strong Piotroski F-Score of 7/9 and 9.6% operating margin indicate the operating business is fundamentally sound even if capital expenditure-heavy investments temporarily depress cash flow.
↓DeterioratingQuality breakdown
- Expectation
- Free cash flow deficit narrows to below 100% of net income within 4 quarters as capital-intensive infrastructure projects begin generating returns.
CounterNegative FCF of this magnitude in a regulated utility reflects ongoing heavy capital spending that may not generate regulated returns for years; dividend sustainability depends entirely on the company's ability to raise external capital, which is sensitive to interest rate movements.
Pacific Gas & Electric ranks as an industry growth leader among regulated electric utilities, trading at a forward P/E of 9.2x with 23% analyst upside to roughly $20.33 and a PEG ratio of 0.72 — pricing in below-average growth in a business that is growing above its sector peers.
↓DeterioratingPeer-rank breakdown
- Expectation
- Price rises above $19.00 within 12 months as earnings growth is recognized and the valuation discount narrows.
CounterPG&E carries a high debt-to-equity ratio with a leverage penalty, operates exclusively in Northern and Central California with concentrated wildfire liability, and negative free cash flow of 196% of net income undermines the earnings quality of the utility's reported results.
PG&E has beaten earnings estimates in 2 of the last 4 quarters with average positive surprises of 9% and 17% in the beat quarters, demonstrating the regulated utility's ability to deliver earnings above the conservatively set utility estimates.
↓DeterioratingEarnings
- Expectation
- Earnings beat consensus by more than 5% in at least 2 of the next 4 quarters, sustaining the beat cadence.
CounterOne recent miss was negative 1.9% and the company has had an inline result; the utility earnings track record is uneven and may reflect the difficulty of forecasting regulatory cost recovery timing rather than operational outperformance.
Pacific Gas & Electric trades above its 200-day moving average with a momentum score of 6.9 and rising on-balance volume, indicating buyers are sustaining the uptrend in the regulated utility space.
↑ImprovingMomentum breakdown
- Expectation
- Price holds above the 200-day moving average for at least 6 consecutive months while on-balance volume trends upward.
CounterThe technical picture is range-bound with RSI at 53 and Bollinger mid-band — positive but not strongly directional; a broader utility selloff driven by rate concerns could break the 200-day support quickly.
Per-dimension breakdown
Quality
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.0 |
| ROA | 1.7 |
| Gross margin | 4.1 |
| Op margin | 9.5 |
| Net margin | 5.8 |
| Current ratio | 4.1 |
| FCF quality | 0.0 |
| Moat | 3.9 |
| Piotroski F | 4.4 |
- ▸Earnings quality RED FLAG: -218% FCF/NI
- ▸No competitive moat
Growth
1.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.2 |
| EPS growth | 0.2 |
- ▸Declining revenue: -1%
Momentum
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 7.8 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 4.1 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -2.4%/30d — confirmed downtrend
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.0 |
| Analyst rating | 7.4 |
| Price target | 8.8 |
- ▸Analyst upside: 34%
Insider
5.2/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.4 |
- ▸Negligible insider buying — $2,060 (0.000% of mkt cap)
Peer rank
3.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.6 |
| quality rank | 3.1 |
| growth rank | 1.8 |
Technical
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.0 |
| support resistance | 3.0 |
| 52w position | 3.9 |
Risk (lower is worse)
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| volatility | 4.8 |
| put call | 9.5 |
| implied vol | 2.0 |
| max pain risk | 7.0 |
| beta | 10.0 |
| debt equity | 3.2 |
- ▸High IV: 68%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 2.5 |
| earnings history | 5.6 |
| earnings timing | 5.0 |
| surprise avg | 4.7 |
| dividend safety | 4.3 |
| news activity | 7.0 |
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (8)
- MOMENTUM:6.0>=5.5
- ASYMMETRY:2.1>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:104d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- DEATH_CROSS:momentum=6.0>=5.0 recovering
Reward-to-Risk
2.12
Upside
+20.2%
Downside
9.5%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 60
EdgeSector Rotation — Utilities sector out of favor, value=8.7
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.7) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 2.12 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.7, Sentiment at 7.4, and Risk (lower is worse) at 6.6; the weakest are Growth at 1.2, Technical at 3.3, and Peer rank at 3.6. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 2.12 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Utility Growth Leader Valuation
Trip ifAnalyst consensus price target falls below $17 for 2 consecutive months, eliminating the valuation discount thesis.
- P2Earnings Growth Beat Cadence
Trip ifEarnings miss consensus by more than 8% in 2 of the next 4 quarters, reversing the beat cadence.
- P3Above 200ma Momentum Support
Trip ifPrice drops below the 200-day moving average and holds below that level for more than 15 consecutive trading days.
- P4Fcf Deficit Quality Concern
Trip ifFree cash flow deficit exceeds 250% of net income for 2 consecutive quarters, indicating the capital spending program is intensifying beyond current levels.