Public Service Enterprise GroupPEG

Morningstar Rating

Stock Research and Analysis

by Travis Miller

Since New Jersey regulators effectively killed a $17.8 billion merger with Exelon EXC in 2006, we think Public Service Enterprise Group (PSEG) continues to realize the value that Exelon sought to capture. Tightly constrained power supplies in the New Read more

Bulls Say

The two-year merger dance with Exelon turned PSEG into a lean, efficient operator.

PSEG's base-load nuclear and natural gas plants are well-positioned to make money in the high-priced New Jersey power market.

PSEG has one of the lowest-carbon-emitting generation fleets in the region, an increasingly valuable asset in an environmentally conscious world.

Cash from the disposal of underperforming noncore assets has allowed the company to shore up its balance sheet and increase its dividend in each of the last six years. Read more

Bears Say

Rising operating costs and falling utility returns make PSEG's planned New Jersey rate request critical to maintaining profits.

A sustained economic downturn could reduce power demand and reduce output from PSEG's highest-margin power plants.

Power prices, which drive two thirds of the company's operating profits, are highly volatile and tend to follow oil and natural gas prices.

Rising interest rates could unearth more-attractive income-producing investment alternatives for yield-seeking investors. Read more

Strategy

After paring down most of its noncore investments and improving its credit profile, management has embarked on a massive expansion effort in New Jersey. We expect the company to invest nearly $10 billion Read more

Management

The failed Exelon merger led to a management reshuffling. James Ferland, the longest-serving CEO at a major U.S. utility, retired in March 2007 after 20 years at PSEG. President and COO Ralph Izzo, who was head of the regulated unit and has been with Read more

Profile

Public Service Enterprise Group is the holding company for a regulated utility (PSE&G), a competitive energy supplier (PSEG Power), and an energy investment firm (Energy Read more

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