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PPL (PPL) Down 0.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for PPL (PPL - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PPL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

PPL Corp Q2 Earnings Lag Estimates, Revenues Fall Y/Y

PPL Corp reported second-quarter 2020 adjusted earnings per share of 55 cents, which missed the Zacks Consensus Estimate of 56 cents by a penny.

The bottom line also declined 5.2% year over year. The results were impacted by lower sales volumes, stemming from the ongoing pandemic and share dilution.

On a GAAP basis, the company generated earnings per share (EPS) of 45 cents compared with 60 cents in the year-ago quarter.

Total Revenues

PPL Corp posted revenues of $1,739 million in the second quarter, which dipped 3.5% year over year.

Segment Results

U.K. Regulated: Adjusted earnings fell 8.3% from the prior-year quarter to 33 cents per share.

Kentucky Regulated: Adjusted earnings were 10 cents, down 23.1% from the year-ago quarter’s figure.  

Pennsylvania Regulated: Adjusted earnings increased 15.4% from the prior-year quarter’s number to 15 cents.

Corporate and Other: The segment reported a loss of 3 cents in the quarter, narrower than a loss of 4 cents in the prior-year quarter.

Operational Highlights

PPL Corp’s total operating expenses fell 1.6% year over year to $1,144 million in the reported quarter.

The company reported operating income of $595 million, down 7% from $640 million in the prior-year quarter.

Interest expenses inched up 2.8% to $253 million from the year-ago quarter’s $246 million.

Financial Position

As of Jun 30, 2020, the company had cash and cash equivalents of $1,278 million compared with $815 million as of Dec 31, 2019.

Long-term debt (excluding debts due within a year) was $21,098 million as of Jun 30 compared with $20,721 million at the end of 2019.

Net cash provided by operating activities at the end of the first half of 2020 was $1,299 million compared with $1,070 million at the end of the first half of 2019.

Guidance

PPL Corp maintained its guidance for 2020 EPS from ongoing operations in the range of $2.40-$2.60 with a midpoint of $2.50, which is higher than the Zacks Consensus Estimate of $2.42.

However, the company withdrew its 2021 EPS guidance, reflecting company's announced process to sell the U.K. business.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months.

VGM Scores

At this time, PPL has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

PPL has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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