PUBLIC SERVICE ENTERPRISE GROUP INC (PEG): what the price assumes

In the published model solve dated 2026-Q2, anchored at $73.19, PUBLIC SERVICE ENTERPRISE GROUP INC (PEG) is priced for -1.8% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/PEG

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.5% sits below it).

How unusual the bet is: n/a

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.9%); the inversion above states its own rate.

Per-Model Detail (n=16)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• PSEG runs almost entirely as a regulated New Jersey wire and pipe business, with PSE&G serving 2.4 million electric and 1.9 million gas customers across a 2,600-square-mile service area, and a 2026 to 2030 capital plan the company sizes at "$22.5 billion to $25.5 billion" aimed at a regulated rate base growing 6.0% to 7.5% a year.
• The largest risk is leverage and rate-case dependency: net debt sits near $23.9 billion against trailing operating profit, interest coverage runs about 3.1 times, and every dollar of that capital program earns a return only once a state commission approves the recovery.
• Next to watch is whether the carbon-free nuclear fleet converts surging regional power demand into premium long-term contracts, after Jefferies cut the stock to Hold in 2026 citing reduced confidence on existing-plant data center deals.

Bull Case

Start with where the price lands against the methods, because for a utility that pattern is the whole argument. The peer-multiple methods place PSEG within a hair of today's price, and the growth methods that credit the capital program reach above it. The earnings-power methods, which value the business as if it never grows again, say expensive. That split is exactly what you would expect from a regulated utility in the middle of a heavy investment cycle: priced today for the rate base it is building, not the earnings it has already booked. The relative lens has the price almost dead-on a 20x sector earnings multiple, and the discounted cash-flow methods clear it. Only the zero-growth earnings anchor falls far below, and a zero-growth anchor is the wrong frame for a company spending more than $20 billion to grow its asset base by half this decade.

The mechanic underneath is the least exciting thing in finance and that is the point. PSEG earns an allowed return on capital it sinks into poles, wires, substations, and gas mains, and the regulator lets it recover that investment plus a return through rates. The FY2025 10-K describes the engine plainly: the 2026 to 2030 program is sized at "$22.5 billion to $25.5 billion", and the company expects it "to result in a compound annual growth rate in our regulated rate base in a range of 6.0% to 7.5% from year-end 2025 to year-end 2030." Over 90% of that spend is regulated. The recovery is not abstract, either. The filing details a working machinery of approved trackers, with the state board having approved "the return on and of PSE&G's capital investments and customer incentives, and recovery of incremental operating costs of the program" on its infrastructure programs. A utility that can put capital to work and earn a contracted return on it has a clearer path to growth than most businesses that have to win every customer twice.

Then there is the part the market is starting to pay attention to: the nuclear fleet. PSEG's Salem and Hope Creek stations produce carbon-free power around the clock, and the 10-K notes the federal production tax credit accrues per "megawatt hour (MWh) subject to adjustment based upon a facility's gross receipts and meeting prevailing wage rules," which puts a floor under nuclear economics. The optionality on top is data centers. Management has pointed to regional load growth and the possibility of premium-priced power purchase agreements with hyperscale and large industrial customers, plus a capacity uprate at Salem. None of that is in the regulated base. If even a fraction of it lands, it sits as upside on a business whose floor is already a contracted return on a growing pile of regulated assets.

Bear Case

The bear case starts not with the multiple but with what the regulated model actually requires: a state commission to keep saying yes. PSEG's growth is only as real as the rate recovery behind it, and that recovery is a sequence of pending decisions, not a guarantee. The 10-K is candid about the queue. A 2026 filing "requests the return on and of investment for GSMP II Ext gas investments placed in service through October 31, 2025. This matter is pending." Each tranche of the $22.5 to $25.5 billion program follows the same path: spend first, then ask New Jersey's board to let you earn on it. A less constructive regulatory posture, a disallowance, or a lag between spend and recovery does not show up as a headline failure. It shows up as the allowed return drifting below what the capital cost, quietly, over years.

The balance sheet is where that risk compounds. Net debt sits near $23.9 billion, roughly seven times trailing operating income, with interest coverage around 3.1 times. That is a heavily levered structure by design, because regulated utilities fund rate base with debt and recover the interest through rates. It works as long as two things hold: rates clear the cost of capital, and refinancing stays cheap. Both are outside management's control. A higher-for-longer rate environment raises the cost of every refinanced maturity and every new dollar of the capital plan, while the allowed return resets only slowly through rate cases. The share count has not moved in years, so there is no buyback cushion absorbing the financing, and there is no excess cash either. The downside floor here is regulated asset value and a contracted return, not a fortress of net cash.

The competitive pressure the bulls lean on cuts both ways. The data center thesis is real demand, but it is also contested. Jefferies downgraded the stock to Hold in 2026 with a price target trimmed to $89, specifically citing lower confidence on existing-plant data center deals. The premium nuclear contracts that would justify a re-rating remain prospective, and management itself has noted that in-state data center interest plateaued for lack of tax incentives. The price already credits the regulated growth and a slice of the nuclear optionality; if the optionality stays prospective and the regulated returns merely meet allowed levels, the stock is a 6% to 8% earnings grower trading like one, with little margin for a recovery stumble.

Valuation

The price is making an ordinary bet for a utility mid-build: that the regulated rate base grows roughly 6% to 7.5% a year and that the allowed returns on it hold. At today's price the relative-multiple lens reads PSEG at about a 20x earnings multiple, which the FY2025 EPS of $4.52 and a sector-median multiple put almost exactly at the current price. The market is paying for the growth program, not discounting it.

The disagreement among the methods is the informative part. The peer-multiple methods land essentially at the price. The growth methods that credit the rate base reach above it, with the discounted cash-flow exit-multiple approach clearing the price by holding today's enterprise multiple flat over a seven-year forecast. The earnings-power methods, which strip out growth and value only the current sustainable profit stream, fall well below. The spread is the premium for growth that has been committed but not yet earned.

Solvency is where the downside lives. Net debt near $23.9 billion against trailing operating income is roughly seven times leverage, with coverage around 3.1 times. That is not distress for a regulated utility, but it is not a cushion either, and the share count has been flat, so there is no buyback offsetting the financing. The bet the buyer is underwriting is straightforward to state: regulated rate base compounds in the high single digits, the commission keeps approving recovery on schedule, and the nuclear fleet eventually adds contract income the regulated base does not contain. The first holds with the highest confidence, the third is the call option, and the leverage is the constraint that ties the two together.

Catalysts

PSEG reaffirmed full-year 2026 operating earnings guidance of $4.28 to $4.40 per share after a Q1 2026 beat, with operating EPS of $1.55 against forecasts of roughly $1.43. Management frames the long-term plan around 6% to 8% compounded earnings growth through 2030, anchored on the regulated capital program and the 6% to 7.5% rate base CAGR. The next regulated catalysts are the pending recovery filings the 10-K describes, including the gas system modernization extension awaiting a return decision; each approval converts spend already in service into earning rate base.

The swing factor is nuclear. Management has flagged premium-priced power purchase agreements with data centers and large industrial customers as upside outside the regulated base, plus a Salem capacity uprate of nearly 200 MW gross, of which the PSEG share is roughly 112 MW. The counterweight is sentiment: Jefferies moved the stock to Hold in 2026 with an $89 target, citing reduced confidence on existing-plant data center deals, and management noted in-state data center demand plateaued without state tax incentives. Watch the next earnings print for whether any nuclear contract moves from prospective to signed; that is the development that would shift the thesis from rate-base compounding to rate-base plus contracted nuclear income.

Peer Cohorts (Per Segment, With Filing Citations)

PSEG Power & Other (reported)

• ES (EVERSOURCE ENERGY)
• FY2025 10-K: …as power restoration and service costs. It also includes a 6 customer charge to collect the cost of providing service to a customer; such as the installation, maintenance, reading and replacement of meters and maintaining accounts and records. • A Transmission Charge Adjustment Mechanism (TCAM) that recovers the cost…
• FY2025 10-K: …of PSNH's customers are entitled to choose competitive energy suppliers. For those customers who do not choose a competitive energy supplier, PSNH purchases power on behalf of, and passes the related cost without mark-up through to, those customers (default energy service). PSNH charges customers only the amount that…
• EIX (EDISON INTERNATIONAL)
• FY2025 10-K: …incur during the subsequent year. In addition, the CPUC has established a "trigger" mechanism for the ERRA and the PABA. The trigger mechanism requires SCE to request an expeditious rate change if the sum of the ERRA balance and the bundled service customers' pro-rata share of the PABA balance exceeds 4% of SCE's…
• FY2025 10-K: …systems, see "-Competition" below. Purchased Power and Fuel Supply SCE obtains the power, energy, and local grid support needed to serve its customers primarily from purchases from external parties. SCE estimates that approximately 15% of power delivered to SCE's customers in 2025 came from SCE's own generating…
• NI (NISOURCE INC.)
• FY2025 10-K: …Center, IN Natural Gas 7,240,000 Rolling Prairie LNG Rolling Prairie, IN Liquified Natural Gas 4,000,000 Total Capacities 11,240,000 Competition. Similar to the Columbia Operations segment, NIPSCO Gas operates in an open and competitive market which allows retail customers to purchase gas directly from producers and…
• FY2025 10-K: …Utility Regulatory Commission JV Joint Venture LDCs Local distribution companies LIFO Last-in, first-out LIHEAP Low Income Heating Energy Assistance Programs Massachusetts Business All of the assets sold to, and liabilities assumed by, Eversource Energy pursuant to the applicable asset purchase agreement MGP…
• FE (FIRSTENERGY CORP)
• FY2025 10-K: …V Energy Efficiency and Conservation Plan, which includes energy efficiency and peak demand reduction programs with demand reduction targets, relative to 2007-2008 peak demands, at 2.01% MW, and energy consumption reduction targets, as a percentage of FE PA's historic 2009 to 2010 reference load, at 2.00% MWh. The…
• FY2025 10-K: …Companies and used to transmit electricity. The segment's revenues are primarily derived from forward-looking formula rates, pursuant to which the revenue requirement is updated annually based on a projected rate base and projected costs, which is subject to an annual true-up based on actual rate base and costs. The…
• WEC (WEC ENERGY GROUP, INC.)
• FY2025 10-K: …incurred fuel and purchased power costs are recovered dollar-for-dollar from our Michigan retail electric customers. For more information about the fuel rules, see E. Regulation. Our average fuel and purchased power costs per MWh by fuel type, including delivery costs, were as follows for the years ended December 31:…
• FY2025 10-K: …Power's share of the ERGS units and both PWGS units are being leased to WE under long-term leases (the ERGS units have 30-year leases that began on the in-service dates of the generating units and the PWGS units have 25-year leases that began on the in-service dates of the generating units). As part of our carbon…
• CMS (CMS ENERGY CORP)
• FY2025 10-K: …cms:ElectricUtilityMember 2025-01-01 2025-12-31 0000811156 us-gaap:OperatingSegmentsMember cms:ConsumersEnergyCompanyMember cms:GasUtilityMember 2025-01-01 2025-12-31 0000811156 us-gaap:OperatingSegmentsMember cms:OtherUtilityServiceMember cms:NorthStarCleanEnergyMember 2025-01-01 2025-12-31 0000811156…
• FY2025 10-K: …CMS Energy and Consumers, including certain present and former affiliates and subsidiaries OSHA Occupational Safety and Health Administration PBO Projected benefit obligation PCB Polychlorinated biphenyl PFAS Per- and polyfluoroalkyl substances PISP Performance Incentive Stock Plan 10 Table of Contents PJM PJM…
• AEP (AMERICAN ELECTRIC POWER CO INC.)
• FY2025 10-K: …of third-party sales. AEPSC acts as the agent. OTC Over-the-counter. OVEC Ohio Valley Electric Corporation, which is 43.47% owned by AEP. Parent American Electric Power Company, Inc., the equity owner of AEP subsidiaries within the AEP consolidation. PATH-WV PATH West Virginia Transmission Company, LLC, a joint…
• FY2025 10-K: …and Subsidiaries Indiana Michigan Power Company and Subsidiaries Ohio Power Company and Subsidiaries Public Service Company of Oklahoma Southwestern Electric Power Company Consolidated Audited Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations 40 AMERICAN…
• OGE (OGE ENERGY CORP.)
• FY2025 10-K: …of competition between suppliers may vary depending on relative costs and supplies of other forms of energy. It is possible that changes in regulatory policies or advances in technologies such as fuel cells, microturbines, windmills and photovoltaic solar cells will reduce costs of new technology to levels that are…
• FY2025 10-K: …beyond those identified in the table above, including additional incremental growth opportunities, will be evaluated based upon the requirements of OG&E's power supply, transmission and distribution operational teams and the expected resultant customer benefits. The annual level of investments in the transmission and…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.