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PPL Stock Underperforms its Industry in Three Months: How to Play?
PPLPPL(PPL) ZACKS·2025-05-20 14:31

Core Viewpoint - PPL Corporation has shown a mixed performance in the stock market, with a 2.5% increase in shares over the last three months, underperforming the Zacks Utility-Electric Power industry's 5.2% rally, while maintaining strong financial discipline and efficient execution of plans [1][2]. Price Performance - PPL shares have gained 2.5% in the last three months compared to the Zacks Utility-Electric Power industry's 5.2% increase [1]. - The average trading volume for PPL in the last three months was approximately 5.83 million shares per day, significantly higher than DTE Energy's 1.56 million shares [5]. Factors Supporting PPL Stock - PPL's service areas in Pennsylvania and Kentucky are seeing increased demand from data centers, with projected new requests reaching 50 gigawatts (GW) in Pennsylvania and 6 GW in Kentucky between 2026 and 2034 [7]. - The company plans to invest 20billionfrom2025to2028tomeetrisingdemandandimproveservicequality,withover6020 billion from 2025 to 2028 to meet rising demand and improve service quality, with over 60% of this investment benefiting from "contemporaneous recovery" to minimize regulatory lag [8]. - PPL aims to reduce expenses by at least 175 million by 2026 compared to 2021 levels, which is expected to strengthen profit margins [9]. - PPL plans to invest over 8billioninelectricandgasdistributioninfrastructurebetween2025and2028toenhancesystemreliability[10].EarningsEstimatesPPLexpectsearningspershare(EPS)of8 billion in electric and gas distribution infrastructure between 2025 and 2028 to enhance system reliability [10]. Earnings Estimates - PPL expects earnings per share (EPS) of 1.75-1.87for2025,withtheZacksConsensusEstimatecurrentlyat1.87 for 2025, with the Zacks Consensus Estimate currently at 1.82 per share [11]. - The Zacks Consensus Estimate indicates year-over-year EPS increases of 7.5% for 2025 and 8.26% for 2026 [11]. Earnings Surprise History - PPL has outperformed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 8.84% [12]. Capital Return Program - PPL continues to return value to shareholders through dividends, with a current annual dividend of $1.09 and projected growth of 6-8% per year through 2027 [14]. - The targeted dividend payout ratio is expected to be in the range of 60-65% [15]. Valuation and Performance Metrics - PPL is currently valued at a premium compared to its industry on a forward 12-month P/E basis [17]. - PPL's trailing 12-month return on equity (ROE) is 9.14%, lower than the industry average of 10.05% [19]. Strategic Outlook - PPL's investments in clean energy generation and infrastructure are expected to support reliable service, aided by efficient operational management and a supportive regulatory environment [21].