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PPL Corporation (PPL) Rides on Investments, Cost Management
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PPL Corporation’s (PPL - Free Report) ongoing investments in infrastructure construction projects and fewer outages will help serve customers efficiently. Focusing on cleaner power generation and growth in domestic operations will increase the company’s overall performance.
However, this Zacks Rank #4 (Sell) company has to face risks related to dependence on its subsidiaries and rising competition in the transmission business.
Tailwinds
PPL has a capital investment plan of $3.1 billion in 2024 and a total of $14.3 billion for the period of 2024-2027. The company’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing fewer outages, courtesy of ongoing investments to strengthen PPL’s infrastructure.
The company will invest in strengthening grid, electricity and gas distribution and electricity transmission and expand renewable generation capacity. It will also focus on new technology to serve customers more efficiently.
The company is also working to reduce its operating and maintenance (O&M) costs. It has already lowered costs by $75 million in 2023 from 2021 baseline and expects $120-$130 million in savings in O&M costs in 2024, $150 million in 2025 and save $175 million in 2026. The company is focused on reducing total operating expenses in the coming years, due to decrease in fuel cost and energy purchases. These initiatives will boost the company’s margins and support earnings growth.
Headwinds
PPL conducts all operations through its subsidiaries. The company’s consolidated assets are also held by its subsidiaries. Its ability to repay debt, guarantee obligations and pay dividends is largely dependent upon the earnings of those subsidiaries.
The company’s Pennsylvania-regulated segment faces competition for transmission projects. To develop transmission projects and structure their costs, it must abide by certain rules of the Federal Energy Regulatory Commission.
Avangrid’s long-term (three-to-five-year) earnings growth rate is 24.37%. The Zacks Consensus Estimate for AGR’s 2024 EPS indicates an increase of 7.66% from the previous year’s reported number.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for NI’s 2024 EPS implies an improvement of 6.88% from that recorded in 2023.
DTE Energy’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for DTE’s 2024 EPS indicates an increase of 16.93% from the previous year’s reported number.
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PPL Corporation (PPL) Rides on Investments, Cost Management
PPL Corporation’s (PPL - Free Report) ongoing investments in infrastructure construction projects and fewer outages will help serve customers efficiently. Focusing on cleaner power generation and growth in domestic operations will increase the company’s overall performance.
However, this Zacks Rank #4 (Sell) company has to face risks related to dependence on its subsidiaries and rising competition in the transmission business.
Tailwinds
PPL has a capital investment plan of $3.1 billion in 2024 and a total of $14.3 billion for the period of 2024-2027. The company’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing fewer outages, courtesy of ongoing investments to strengthen PPL’s infrastructure.
The company will invest in strengthening grid, electricity and gas distribution and electricity transmission and expand renewable generation capacity. It will also focus on new technology to serve customers more efficiently.
The company is also working to reduce its operating and maintenance (O&M) costs. It has already lowered costs by $75 million in 2023 from 2021 baseline and expects $120-$130 million in savings in O&M costs in 2024, $150 million in 2025 and save $175 million in 2026. The company is focused on reducing total operating expenses in the coming years, due to decrease in fuel cost and energy purchases. These initiatives will boost the company’s margins and support earnings growth.
Headwinds
PPL conducts all operations through its subsidiaries. The company’s consolidated assets are also held by its subsidiaries. Its ability to repay debt, guarantee obligations and pay dividends is largely dependent upon the earnings of those subsidiaries.
The company’s Pennsylvania-regulated segment faces competition for transmission projects. To develop transmission projects and structure their costs, it must abide by certain rules of the Federal Energy Regulatory Commission.
Stocks to Consider
Some better-ranked stocks from the same industry are Avangrid (AGR - Free Report) , NiSource Inc. (NI - Free Report) and DTE Energy (DTE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Avangrid’s long-term (three-to-five-year) earnings growth rate is 24.37%. The Zacks Consensus Estimate for AGR’s 2024 EPS indicates an increase of 7.66% from the previous year’s reported number.
NiSource’s long-term earnings growth rate is 7.15%. The Zacks Consensus Estimate for NI’s 2024 EPS implies an improvement of 6.88% from that recorded in 2023.
DTE Energy’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for DTE’s 2024 EPS indicates an increase of 16.93% from the previous year’s reported number.