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We expect electricity and natural gas supplier PPL Corporation (PPL - Analyst Report) to beat expectations when it reports fourth-quarter 2012 results on Feb 14, 2013.

Why a Likely Positive Surprise?

Our proven model shows that PPL Corporation is likely to beat earnings because it has the right combination of key factors.

Positive Zacks ESP: Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +2.17%. This is meaningful and a leading indicator of a likely positive earnings surprise for this company.

Zacks #3 Rank (Hold): We note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of PPL Corporation’s Zacks Rank #3 (Hold) and +2.17% ESP makes us confident of a positive earnings beat this announcement.

Earnings Drivers

PPL Corporation’s diversified asset portfolio and business model is adaptable to a wide range of market situations. We expect this diversified generation mix positions the company to benefit from proposed Environmental Protection Agency regulations.

PPL Corporation continues to focus on retaining a strong credit profile and liquidity position. As of Sep 30, 2012, the cash position was $946 million and available domestic credit facilities were $4.6 billion. This financial comfort enables it to deal with the after-effects of the Hurricane Sandy and follow inorganic as well as organic growth strategies.

The positive trend is seen in the trailing four quarter average surprise of 12.31%. PPL Corporation’s third-quarter surprise was 5.88% aided by benefits from acquisition along with solid liquidity and credit positions.

Other Stocks to Consider

PPL Corporation is not the only organization looking up this earnings season. We also expect other utility providers to beat earnings:

Ormat Technologies Inc. (ORA - Snapshot Report), earnings ESP of +50.00% and Zacks Rank #2 (Buy).

NV Energy, Inc. , earnings ESP of +14.29% and Zacks Rank #3 (Hold).

PG&E Corporation (PCG - Analyst Report), earnings ESP of +1.75% and Zacks Rank #3 (Hold).

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