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We have maintained our Neutral recommendation on PPL Corporation (PPL - Analyst Report). The company currently has a Zacks Rank #3 (Hold).

Why the Reiteration?

In fourth-quarter and full-year 2012, PPL Corp.’s earnings and revenues surpassed the Zacks Consensus Estimates primarily on strong performances by its Kentucky and UK Regulated segments. On a year-over-year basis, the results were hurt by lower realized and unrealized wholesale energy marketing revenues.

We view PPL Corp. as an organization with a well diversified asset portfolio. This diverse generation mix aids the company to benefit from proposed Environmental Protection Agency regulations.

PPL Corp. continues to focus on maintaining a strong liquidity position. As of Dec 31, 2012, the company had $901 million in cash and $4.7 billion available under its domestic credit facilities. This financial condition enables the company to follow a steady inorganic growth strategy.

In addition, the company expects to achieve a stable, long-term growth from its regulated electricity delivery businesses through electric and gas base rate hikes in its Kentucky Regulated segment, improvement in operational efficiency and a strong customer-base.

However, higher operating and maintenance expenses, and stringent regulations may challenge PPL Corp.’s future performance.

The Zacks Consensus Estimate for first-quarter 2013 earnings currently stands at 71 cents per share, up 0.95% year over year primarily attributable to strong performances at Kentucky, Pennsylvania and UK regulated segments.

Other Stocks to Consider

Other stocks from the industry that are presently performing better include Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report), Edison International (EIX - Analyst Report) and Otter Tail Corporation (OTTR - Snapshot Report). All the three stocks carry a Zacks Rank #1 (Strong Buy).

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