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PPL vs. Xcel Energy: Which Utility Stock Offers More Upside?
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Key Takeaways
PPL and XEL are investing in infrastructure upgrades and expanding renewable energy portfolios.
PPL sees rising data center demand, with 50 GW requested in Pennsylvania through 2034.
XEL expects 8.9 GW data center demand by 2029 and plans $45B in investments through 2029.
Utility service providers benefit from a number of positive factors, including increased electricity tariffs, accretive acquisitions, cost reductions and the deployment of energy-efficiency initiatives. The power business also gains from continuous efforts to make electric infrastructure more resilient to adverse weather conditions and the ongoing switch to affordable, renewable energy sources for electricity production.
Utilities generally enjoy consistent revenue growth and profitability. Due to their capacity to create cash flows and manage returns, utilities can enhance shareholder value via regular dividend payments.
Driven by the shift to renewable energy, electric utilities in the United States are expanding beyond their historical function as sources of income. Climate measures and federal incentives are changing the utilities sector. The utilities leading this change are in a strong position to develop steadily, giving investors a low-risk way to get involved in the growing clean energy market.
With the increasing clean energy market, utility companies like PPL Corporation (PPL - Free Report) and Xcel Energy (XEL - Free Report) are becoming attractive investment options. Both companies are integrating renewable energy and are set to take advantage of the growing demand from data centers.
PPL’s Argument
PPL benefits from its focus on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing far less outages, courtesy of the company’s initiative to further strengthen its infrastructure. PPL is experiencing load growth, driven by data center demand. Active data center requests have increased to 50 gigawatt (“GW”) for the 2026-2034 period in the Pennsylvania segment. The Kentucky segment announced the first 400 MW hyperscale data center campus in Louisville. Active data center requests have increased to nearly 6GW over 2026-2034.
PPL plans to achieve its carbon emissions target of 70% by 2035 and of 80% by 2040, from its 2010 levels. It will do so through the introduction of new carbon capture technology and the addition of more renewable sources to the generation portfolio. It also aims to become carbon neutral by 2050. This initiative can help the company lower the cost of operations by focusing on new and advanced assets.
Xcel Energy’s Argument
Xcel Energy is aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects. Due to the upgrade of infrastructure and distribution assets, Xcel Energy’s residential electric and natural gas bills are down 28% and 12%, respectively, from the national average, which continues to attract new customers for its service. Xcel Energy expects a total customer request for data centers of nearly 8.9 GW by 2029. Its five-year plan includes 5% per year electric sales growth, of which approximately 50% is from data centers.
XEL is undertaking initiatives to produce and deliver clean energy to customers. The company aims to serve all customers with 100% zero-carbon emissions by 2050.
Let's compare the two stocks' fundamentals to find out which one is a better investment pick at present.
How Do Zacks Estimates Compare for PPL & XEL?
The Zacks Consensus Estimate for PPL’s 2025 and 2026 earnings per share (EPS) indicates an increase of 7.69% and 8.06%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Xcel Energy’s 2025 and 2026 EPS indicates an increase of 8.86% and 8.1%, respectively.
Image Source: Zacks Investment Research
PPL & XEL’s Return on Equity (ROE)
ROE measures how efficiently a company is utilizing its shareholders’ funds to generate profits. PPL’s current ROE is 9.14% compared with Xcel Energy’s 10.2%. Both underperform the industry’s ROE of 10.41%.
PPL & XEL’s Strategic Investment Plans
PPL expects a regulated capital investment plan of $20 billion during 2025-2028. The capital investment for 2025 and 2026 is expected to be $4.3 billion and $5.2 billion, respectively. PPL’s Pennsylvania segment has nearly 11 GW of potential data center demand in the advanced stages, representing a potential transmission capital investment of $700-$850 million.
Xcel Energy aims to spend $45 billion during the 2025-2029 period. The investment plan includes nearly $28.4 billion for strengthening its electric distribution and transmission operations during 2025-2029. Nearly $5 billion will be invested in renewables during the said time frame. The company will invest $4.47 billion in electric generation and $3.4 billion in natural gas operation during the period.
PPL & XEL’s Dividend Yield
Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for PPL is 3.01% compared with the Zacks S&P 500 Composite’s average of 1.18%, and the same for Xcel Energy is 3.19%.
Debt Position of PPL & XEL
The debt-to-capital ratio is a vital indicator of the financial position of a company. The indicator shows the amount of debt used to run a business. PPL and Xcel Energy have a debt-to-capital of 54.73% and 61.19%, respectively, compared with the industry’s 60.8%.
Currently, PPL's times interest earned (TIE) ratio is 2.7, and the same for XEL is 2.2. Both companies have maintained their TIE ratio at more than 1 for over a decade now. This indicates that the companies have enough financial flexibility to meet their near-term debt obligations.
PPL or XEL: Which Is a Better Choice Now?
Both PPL and XEL benefit from their strategic investments to further improve infrastructure and expand renewable portfolio. Both stocks have a lot of potential to improve further and cater to the increasing demand from data centers.
Image: Bigstock
PPL vs. Xcel Energy: Which Utility Stock Offers More Upside?
Key Takeaways
Utility service providers benefit from a number of positive factors, including increased electricity tariffs, accretive acquisitions, cost reductions and the deployment of energy-efficiency initiatives. The power business also gains from continuous efforts to make electric infrastructure more resilient to adverse weather conditions and the ongoing switch to affordable, renewable energy sources for electricity production.
Utilities generally enjoy consistent revenue growth and profitability. Due to their capacity to create cash flows and manage returns, utilities can enhance shareholder value via regular dividend payments.
Driven by the shift to renewable energy, electric utilities in the United States are expanding beyond their historical function as sources of income. Climate measures and federal incentives are changing the utilities sector. The utilities leading this change are in a strong position to develop steadily, giving investors a low-risk way to get involved in the growing clean energy market.
With the increasing clean energy market, utility companies like PPL Corporation (PPL - Free Report) and Xcel Energy (XEL - Free Report) are becoming attractive investment options. Both companies are integrating renewable energy and are set to take advantage of the growing demand from data centers.
PPL’s Argument
PPL benefits from its focus on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing far less outages, courtesy of the company’s initiative to further strengthen its infrastructure. PPL is experiencing load growth, driven by data center demand. Active data center requests have increased to 50 gigawatt (“GW”) for the 2026-2034 period in the Pennsylvania segment. The Kentucky segment announced the first 400 MW hyperscale data center campus in Louisville. Active data center requests have increased to nearly 6GW over 2026-2034.
PPL plans to achieve its carbon emissions target of 70% by 2035 and of 80% by 2040, from its 2010 levels. It will do so through the introduction of new carbon capture technology and the addition of more renewable sources to the generation portfolio. It also aims to become carbon neutral by 2050. This initiative can help the company lower the cost of operations by focusing on new and advanced assets.
Xcel Energy’s Argument
Xcel Energy is aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects. Due to the upgrade of infrastructure and distribution assets, Xcel Energy’s residential electric and natural gas bills are down 28% and 12%, respectively, from the national average, which continues to attract new customers for its service. Xcel Energy expects a total customer request for data centers of nearly 8.9 GW by 2029. Its five-year plan includes 5% per year electric sales growth, of which approximately 50% is from data centers.
XEL is undertaking initiatives to produce and deliver clean energy to customers. The company aims to serve all customers with 100% zero-carbon emissions by 2050.
Let's compare the two stocks' fundamentals to find out which one is a better investment pick at present.
How Do Zacks Estimates Compare for PPL & XEL?
The Zacks Consensus Estimate for PPL’s 2025 and 2026 earnings per share (EPS) indicates an increase of 7.69% and 8.06%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Xcel Energy’s 2025 and 2026 EPS indicates an increase of 8.86% and 8.1%, respectively.
Image Source: Zacks Investment Research
PPL & XEL’s Return on Equity (ROE)
ROE measures how efficiently a company is utilizing its shareholders’ funds to generate profits. PPL’s current ROE is 9.14% compared with Xcel Energy’s 10.2%. Both underperform the industry’s ROE of 10.41%.
PPL & XEL’s Strategic Investment Plans
PPL expects a regulated capital investment plan of $20 billion during 2025-2028. The capital investment for 2025 and 2026 is expected to be $4.3 billion and $5.2 billion, respectively. PPL’s Pennsylvania segment has nearly 11 GW of potential data center demand in the advanced stages, representing a potential transmission capital investment of $700-$850 million.
Xcel Energy aims to spend $45 billion during the 2025-2029 period. The investment plan includes nearly $28.4 billion for strengthening its electric distribution and transmission operations during 2025-2029. Nearly $5 billion will be invested in renewables during the said time frame. The company will invest $4.47 billion in electric generation and $3.4 billion in natural gas operation during the period.
PPL & XEL’s Dividend Yield
Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for PPL is 3.01% compared with the Zacks S&P 500 Composite’s average of 1.18%, and the same for Xcel Energy is 3.19%.
Debt Position of PPL & XEL
The debt-to-capital ratio is a vital indicator of the financial position of a company. The indicator shows the amount of debt used to run a business. PPL and Xcel Energy have a debt-to-capital of 54.73% and 61.19%, respectively, compared with the industry’s 60.8%.
Currently, PPL's times interest earned (TIE) ratio is 2.7, and the same for XEL is 2.2. Both companies have maintained their TIE ratio at more than 1 for over a decade now. This indicates that the companies have enough financial flexibility to meet their near-term debt obligations.
PPL or XEL: Which Is a Better Choice Now?
Both PPL and XEL benefit from their strategic investments to further improve infrastructure and expand renewable portfolio. Both stocks have a lot of potential to improve further and cater to the increasing demand from data centers.
However, our choice at the moment is PPL, given its better debt levels and growth prospects in its service region. Both PPL and XEL stocks carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.