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PPL Corp Thrives on Diverse Asset Portfolio & Business Model


On Nov 21, we issued an updated research report on PPL Corporation PPL. PPL Corporation’s diverse asset portfolio and business model allow it to perform in and adapt to different market conditions. However, volatile commodity prices and regulatory risks are challenges.

Recently, PPL Corp. reported third-quarter 2016 adjusted earnings of 63 cents per share, topping the Zacks Consensus Estimate of 59 cents by 6.8%. Reported earnings also increased 23.5% on a year-over-year basis. PPL Corp.’s total revenue of $1,889 million missed the Zacks Consensus Estimate of $2,000 million but were up marginally from the year-ago tally of $1,878 million.

PPL Corp. continues to follow an organic growth strategy to expand and upgrade its utility systems. The company expects compound annual earnings growth of 5–6% from 2017 through 2020 driven primarily by strong rate base growth of approximately 5% compounded annually in regulated operations over the 2016–2020 period. The utility anticipates earnings growth of 6–8% from domestic operations and 4–6% from UK operations through 2020.



PPL Corp.’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. The company projects total capital expenditure of approximately $15.4 billion in the 2016–2020 timeframe.

On the flip side, PPL Corp.’s operations are subject to service disruptions in form of breakdown of equipment, natural calamities like hurricanes and earthquakes, and sudden outages. These not only obstruct the transmission of electricity but also increase maintenance costs, thereby adversely affecting cash flows.

Zacks Rank & Key Picks

Currently, PPL Corp. carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Avista Corp. AVA, Ameren Corporation AEE and DTE Energy Company DTE.

Avista has seen one upward estimate revision for 2016 over the last 60 days. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren Corp., another Zacks Rank #2 stock, has seen four upward estimate revisions for 2016 over the last 60 days.

DTE Energy has seen six upward estimate revisions for 2016 over the last 60 days. The stock carries a Zacks Rank #2 as well.

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