PEG Public Service Enterprise Group
Solid NJ utility at fair premium; nuclear upside priced in, limited margin of safety.
The story
PSEG is a regulated NJ utility with a strong wires franchise and nuclear fleet earning slightly above allowed returns. Trailing ROE of 11.8% aligns with normalized expectations; data-center demand in PJM supports continued rate-base growth. The stock trades modestly above intrinsic value, pricing in sustained above-allowed returns.
Normalized ROE held at 11.5% — trailing 11.8% is slightly elevated but within range for a utility with nuclear upside; terminal growth nudged to 4.0% (still below risk-free) reflecting PJM data-center demand supporting rate-base capex. Y1 growth trimmed slightly to 7% as revenue trajectory moderates.
Value drivers
| Return on equity (normalized) | 11.5% |
| Book-value growth (Y1) | 7.0% |
| Terminal book growth | 4.0% |
| Beta | 0.60 |
| Failure probability | 0.5% |
| Cost of equity | 7.5% |
Valuation bridge
| PV of excess returns | 5.26B |
| PV of terminal excess | 12.07B |
| Equity value | 34.14B |
| ÷ shares → per share | $68.51 |
News
neutral +0.10 · 8 articles
- PSEG (PEG) Down 2.9% Since Last Earnings Report: Can It Rebound?
- Sector Update: Energy Stocks Rise Wednesday
- Pennsylvania Sets New Data-Center Rules—and Some Energy Companies Can Actually Benefit
- Do Wall Street Analysts Like Public Service Enterprise Stock?
- PSEG (PEG) Q2 2026 Earnings Call Transcript
- PSEG (PEG) Stock Looks Reasonable On Dividends But Richer On Earnings
- Public Service Enterprise Group (PEG) Could Be 15% Undervalued Following ESOP Share Filing
- Public Service Enterprise Group Q2 Earnings Call Highlights
Projected excess returns on equity
| Yr | Book equity | ROE | Excess return | PV |
|---|---|---|---|---|
| 1 | 16.98B | 11.5% | 682.00M | 634.51M |
| 2 | 18.17B | 11.4% | 709.22M | 613.90M |
| 3 | 19.38B | 11.3% | 734.61M | 591.60M |
| 4 | 20.61B | 11.2% | 757.85M | 567.81M |
| 5 | 21.84B | 11.0% | 778.62M | 542.76M |
| 6 | 23.08B | 10.9% | 796.63M | 516.65M |
| 7 | 24.31B | 10.8% | 811.60M | 489.71M |
| 8 | 25.52B | 10.7% | 823.29M | 462.17M |
| 9 | 26.71B | 10.6% | 831.45M | 434.25M |
| 10 | 27.86B | 10.5% | 835.91M | 406.18M |
Key risks
- NJ regulatory outcome on future rate cases could compress allowed ROE toward 9.5%
- Nuclear subsidies/zero-emission credits face political renewal risk
- Data-center load growth may not materialize at expected pace
Catalysts
- New Jersey rate case outcome establishing forward allowed ROE
- PJM capacity auction results supporting nuclear economics
- Data-center interconnection agreements in Pennsylvania/NJ