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Here's Why You Should Add PPL to Your Portfolio Right Now
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PPL Corporation’s (PPL - Free Report) ongoing capital investments to strengthen infrastructure, focus on clean generation and growth in domestic operations increase its earnings potential. Given its growth opportunities and strong dividend history, PPL makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for PPL’s 2023 earnings per share (EPS) has increased 0.6% to $1.59 in the past 60 days. This indicates a year-over-year bottom-line improvement of 12.8%.
PPL’s long-term (three- to five-year) earnings growth rate is 7.42%. It delivered an average earnings surprise of 3.14% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, PPL’s ROE is 7.81%, higher than the industry’s average of 4.9%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Debt Position
Currently, PPL’s total debt to capital is 50.96%, much better than the industry’s average of 58.1%.
The time to interest earned ratio at the end of first-quarter 2023 was 2.6. The ratio, being greater than one, reflects the company’s ability to meet future debt obligations without difficulties.
Dividend History
PPL has a long history of dividend payments and plans to increase the same in the range of 6-8%, subject to approval by its board of directors. The board approved a dividend hike in 2022, which was followed by another 7% increase in February 2023. This resulted in a quarterly dividend of 24 cents per share and an annualized dividend of 96 cents per share.
The company’s current dividend yield is 3.57% compared with the Zacks S&P 500 Composite's average of 1.45%.
Systematic Investments
PPL’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. The company expects a regulated capital investment plan of $12 billion during 2023-2026. PPL's capital investments were approximately $600 million in the first quarter of 2023 and are expected to be nearly $2.5 billion in 2023.
Price Performance
In the past year, PPL’s shares have rallied 1.1% against the industry’s average decline of 8.5%.
Avista’s long-term earnings growth rate is 6.35%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $2.32, implying a year-over-year increase of 9.43%.
PNM Resources’ long-term earnings growth rate is 4.5%. The consensus estimate for the company’s 2023 EPS is pegged at $2.71, indicating a year-over-year improvement of 0.74%.
NiSource’s long-term earnings growth rate is 6.9%. The consensus mark for the company’s 2023 EPS is pinned at $1.58, implying year-over-year growth of 7.5%.
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Here's Why You Should Add PPL to Your Portfolio Right Now
PPL Corporation’s (PPL - Free Report) ongoing capital investments to strengthen infrastructure, focus on clean generation and growth in domestic operations increase its earnings potential. Given its growth opportunities and strong dividend history, PPL makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for PPL’s 2023 earnings per share (EPS) has increased 0.6% to $1.59 in the past 60 days. This indicates a year-over-year bottom-line improvement of 12.8%.
PPL’s long-term (three- to five-year) earnings growth rate is 7.42%. It delivered an average earnings surprise of 3.14% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, PPL’s ROE is 7.81%, higher than the industry’s average of 4.9%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Debt Position
Currently, PPL’s total debt to capital is 50.96%, much better than the industry’s average of 58.1%.
The time to interest earned ratio at the end of first-quarter 2023 was 2.6. The ratio, being greater than one, reflects the company’s ability to meet future debt obligations without difficulties.
Dividend History
PPL has a long history of dividend payments and plans to increase the same in the range of 6-8%, subject to approval by its board of directors. The board approved a dividend hike in 2022, which was followed by another 7% increase in February 2023. This resulted in a quarterly dividend of 24 cents per share and an annualized dividend of 96 cents per share.
The company’s current dividend yield is 3.57% compared with the Zacks S&P 500 Composite's average of 1.45%.
Systematic Investments
PPL’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. The company expects a regulated capital investment plan of $12 billion during 2023-2026. PPL's capital investments were approximately $600 million in the first quarter of 2023 and are expected to be nearly $2.5 billion in 2023.
Price Performance
In the past year, PPL’s shares have rallied 1.1% against the industry’s average decline of 8.5%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Avista Corp. (AVA - Free Report) , PNM Resources (PNM - Free Report) and NiSource Inc. (NI - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avista’s long-term earnings growth rate is 6.35%. The Zacks Consensus Estimate for the company’s 2023 EPS is pinned at $2.32, implying a year-over-year increase of 9.43%.
PNM Resources’ long-term earnings growth rate is 4.5%. The consensus estimate for the company’s 2023 EPS is pegged at $2.71, indicating a year-over-year improvement of 0.74%.
NiSource’s long-term earnings growth rate is 6.9%. The consensus mark for the company’s 2023 EPS is pinned at $1.58, implying year-over-year growth of 7.5%.