Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, PG&E's Probability of Financial Distress (%) is 0.05%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison
For the Utilities - Regulated Electric subindustry, PG&E's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
PG&E Probability of Financial Distress (%) Distribution
For the Utilities - Regulated industry and Utilities sector, PG&E's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where PG&E's Probability of Financial Distress (%) falls in comparison to its industry or sector. The grey bar indicates the Probability of Financial Distress (%)'s extreme value range as defined by GuruFocus.
PG&E Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | -7.70 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.05% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
PG&E (NYSE:PCG) Business Description
Traded in Other Exchanges
Address
300 Lakeside Drive, Oakland, CA, USA, 94612
PG&E is a holding company whose main subsidiary is Pacific Gas and Electric, a regulated utility operating in Central and Northern California that serves 5.3 million electricity customers and 4.6 million gas customers in 47 of the state's 58 counties. PG&E operated under bankruptcy court supervision between January 2019 and June 2020. In 2004, PG&E sold its unregulated assets as part of an earlier postbankruptcy reorganization.
Executives
| Carolyn Jeanne Burke |
officer: EVP Finance |
C/O EXCELERATE ENERGY, INC., 2445 TECHNOLOGY FOREST BLVD., LEVEL 6, THE WOODLANDS TX 77381 |
| Edward G Cannizzaro |
director |
5130 HACIENDA DRIVE, DUBLIN CA 94568 |
| Stephanie N Williams |
officer: VP and Controller |
77 BEALE STREET, PO BOX 77000, SAN FRANCISCO CA 94177 |
| Cheryl F. Campbell |
director |
C/O 77 BEALE ST., P.O. BOX 770000, SAN FRANCISCO CA 94177 |
| William Lloyd Smith |
director |
46429 LANDING PARKWAY, FREMONT CA 94538 |
| Marlene Santos |
other: EVP, CCO at PG&E Company |
77 BEALE STREET, P.O. BOX 770000, SAN FRANCISCO CA 94117 |
| Carlos M Hernandez |
director |
|
| Adam L Wright |
other: EVP, Ops & COO at PG&E Company |
77 BEALE STREET, P.O. BOX 770000, SAN FRANCISCO CA 94177 |
| Ajay Waghray |
officer: SVP & Chf Information Ofc |
C/O ASSURANT, INC., 28 LIBERTY STREET, 41 FL., NEW YORK NY 1 |
| Julius Cox |
officer: EVP/Ppl, Shrd Svcs & Spply Chn |
77 BEALE STREET, POB 770000, SAN FRANCISCO CA 94177 |
| Sumeet Singh |
officer: EVP/CRO & Chf Safety Ofc |
77 BEALE STREET, PO BOX 770000, SAN FRANCISCO CA 94177 |
| Carla J Peterman |
officer: EVP/Corp. Affairs & CSO |
77 BEALE STREET, P.O. BOX 77000, SAN FRANCISCO CA 94177 |
| Patricia K Poppe |
director, officer: Chief Executive Officer |
77 BEALE STREET, POB 770000, SAN FRANCISCO CA 94177 |
| Christopher A Foster |
officer: EVP & Chief Financial Officer |
77 BEALE ST., P.O. BOX 770000, SAN FRANCISCO CA 94177 |
| Jason M Glickman |
other: EVP of EPS of PG&E Company |
77 BEALE STREET, PO BOX 770000, SAN FRANCISCO CA 94177 |
PG&E (NYSE:PCG) Headlines
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