QS Research · Michael Burry's Scion Capital analyst template · 2006
PG&E Corp (PCG)
As of 2026-11-09 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -25% · upside +62%
The market is pricing PG&E's wildfire-liability exposure as permanent rather than temporary: the shares sit at 11.7x TTM net income to common and 1.05x common equity, and the whole de-rating since August 2026 came from Sacramento rather than from operations, since FY2026 core EPS guidance of $1.64-$1.66 and FY2027's $1.78-$1.82 were reaffirmed on 2026-10-22 and nine-month 2026 core EPS still rose to $1.24 from $1.14. The counterweight is the balance sheet: TTM free cash flow is -$4.98B (operating cash flow $7.80B less capex $12.78B) against $61.92B of net debt, so the equity is a leveraged residual that depends on the CPUC's allowed return and on funding, not on volume. At the company's own 11.7x, TTM net income to common of $2.98B is worth $34.87B versus the $34.76B market cap, a 0.3% base case, while the +62.4% upside ($1.80 FY2027 core EPS x 11.7 = $21.06) needs the legislative fix plus delivery on guidance and the -24.6% downside ($2.24B, the FY2023 earnings level, x 11.7 = $26.2B) needs only the status quo. That payoff is interesting but does not clear the long bar on the base case, and the GAAP tail (up to $3.7B of accelerated Wildfire Fund amortization) is worse than the -24.6%, so this is a watch, not a long.
Key numbers
- Share price: $12.97
- Market cap: $34.76B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $25.77B
- P/E (TTM): 11.7x
- Price / book: 1.05x
The 15 boxes
- ✓ 1. Long-form business notes
PCG is a holding company for Pacific Gas and Electric Company, a Northern/Central California utility that earns mainly from regulated sale and delivery of electricity and natural gas under cost-of-service ratemaking. Reported revenue rose from $18.47B in 2020 to $24.93B in 2025 and operating income from $1.75B to $4.75B, while net income to common went from -$1.32B in 2020 to $2.59B in 2025. The latest 10-K emphasizes a large capex plan, wildfire mitigation, load growth from data centers/EVs/buildings, and a dividend payout target of about 20% of core earnings by 2028.
- ✓ 2. Competitive advantage
PG&E's main advantage is a regulated cost-of-service utility model with decoupled base revenues and roughly 300 local franchise agreements, which supports a large network and scale. But the franchise is not exclusive: California permits CCA/DA retail competition and municipal bypass, and the Utility also competes for gas transportation/storage and CAISO transmission projects. FY2025 operating income was $4.75B and operating cash flow $8.72B, up from FY2020, but capex was $11.79B. The sources describe a regulated network/scale advantage, not a brand or customer-switching-cost advantage.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue was $6,188 million, down $62 million or 1% y/y (electric -2%, gas +2%), while nine-month 2026 revenue rose 5% to $18,971 million on 2023 WMCE final-decision rates. GAAP EPS fell to $0.34 from $0.37 and non-GAAP core EPS to $0.41 from $0.50, with nine-month core EPS up to $1.24 from $1.14; FY2026 core EPS guidance of $1.64-$1.66 and FY2027 of $1.78-$1.82 was reaffirmed. Wildfire Fund expense rose 64% in Q3 2026 and the 10-Q flags up to $3.7 billion of possible accelerated Wildfire Fund amortization tied to SCE's Eaton fire disclosure. Management cut 2027 capex to $11.4 billion from $13.4 billion, withdrew the 2028-2030 capex forecast and is running a strategic review announced September 2, 2026.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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