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PPL Corp's (PPL) Capex Plan & Focus on Clean Energy Bode Well

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PPL Corporation’s (PPL - Free Report) investment plan to strengthen infrastructure, focus on cleaner energy generation and growth in domestic operation are tailwinds.

The Zacks Consensus Estimate for the company’s 2020 earnings is pegged at $2.42 per share while the same for revenues stands at $7.93 billion. The bottom-line estimate suggests a 1.22% decline from the year-ago reported figure though the top-line projection calls for a 2.11% rise from the prior-year reported number.

What’s Driving the Stock?

PPL Corporation’s capital investment plan primarily focuses on infrastructure-construction projects for generation, transmission and distribution. The company expects to invest $13.8 billion through the 2020-2024 time frame, which will expand the rate base from $29.9 billion in 2020 to $34.2 billion in 2024, seeing a CAGR of 4%.

Moreover, PPL Corporation has a target set to reduce 80% carbon emission by 2050 from its 2010-levels by introducing carbon capture technology and adding more renewable sources to its energy-generation portfolio. Apart from the company, utilities like Duke Energy (DUK - Free Report) , DTE Energy (DTE - Free Report) and Avista Corporation (AVA - Free Report) outlined a plan to supply clean energy to customers.

The company aims to exit its U.K. operations and post completion of its U.K. asset divestiture, it will no more be subject to foreign currency risks. For 2020, the company hedged 100% of its foreign currency to safeguard its interest amid fluctuating prices. These hedges will help the utility perform as expected even if the forex rate falls below the current level.

PPL Corporation boasts strong liquidity, which is sufficient to meet its near-term debt obligations. Its times interest earned ratio was 3.1 in the third quarter of 2020, lower than 3.2 in fourth-quarter 2019. Nonetheless, such a strong ratio indicates that the company will be able to pay down its debt in the near future without any difficulties.

Woes

However, unplanned outages at power plants may increase its expenses. Also, pollution-control execution costs and legal costs may weigh on the finances. Further, stringent laws and regulations may impact PPL Corporation’s revenues negatively.

Zacks Rank & Price Performance

In the past six months, shares of this currently Zacks Rank #3 (Hold) company have gained 2.1%, outperforming the industry’s rise of 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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