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PPL Underperforms Its Industry in a Year: How to Play the Stock?
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Key Takeaways
PPL's shares rose 1% in six months, far behind the industry's 17.6% growth.
PPL plans nearly $23B capex in 2026-2029, targeting 10.3% annual rate base growth through 2029.
PPL sees data-center demand rising to 28.3 GW in Pennsylvania and a 12.9 GW load pipeline in Kentucky.
PPL Corporation’s (PPL - Free Report) shares have gained 1% in the past six months compared with the Zacks Utility-Electric Power industry’s rise of 17.6%. The company also underperformed the Zacks Utilities sector in the same time frame.
PPL Corporation has delivered an average negative earnings surprise of 2.07% over the past four quarters, while increasing competition in the transmission business could continue to pressure its operations. Yet, the company stands to benefit from growing data center demand, especially in Pennsylvania and Kentucky, where such facilities require substantial electricity consumption.
Price Performance (One Year)
Image Source: Zacks Investment Research
Another operator in the same space, FirstEnergy Corp. (FE - Free Report) , is making a substantial investment to strengthen its infrastructure to provide reliable services to customers. The company’s earnings surpassed estimates in three out of the past four reporting quarters and its shares have gained 5.5% in the past year.
Should investors consider adding PPL to their portfolio based on the current softness in price movements? Let us delve deeper and find out the factors that can help investors decide whether it is a good entry point to add PPL stock to their portfolios.
Factors Strengthening PPL Corporation’s Outlook
PPL is also benefiting from economic growth and rising data center demand across its service territories. In Pennsylvania, advanced-stage data center demand has increased to nearly 28.3 gigawatt (“GW”) from 25.2 GW, while Kentucky’s economic development pipeline now indicates potential load growth of 12.9 GW through 2032, up from the earlier estimate of 8.5 GW.
PPL Corporation plans to invest nearly $23 billion between 2026 and 2029, targeting an average annual rate base growth of around 10.3% through 2029. The company’s focus on generation, transmission and distribution projects, along with ongoing infrastructure upgrades, has helped improve service reliability and reduce customer outages.
More than 60% of PPL’s capital investment plan qualifies for “contemporaneous recovery,” which mitigates the effects of regulatory lag on earnings. This expedited recovery of capital expenditures enables the company to efficiently fund its long-term projects.
PPL Corporation utilizes a “self-healing grid” through its smart grid technology, enabling the system to automatically identify outages and redirect power to reduce customer disruptions. The advanced infrastructure also delivers real-time data, supporting proactive maintenance and improving overall grid reliability and operational efficiency.
Headwinds for PPL Stock
PPL Corporation faces challenges from high capital investment needs, project execution and cost-recovery risks, and rising competition in Pennsylvania’s transmission market. The company also remains exposed to weather-related demand fluctuations, operational and cyber risks, equipment failures, and fuel supply disruptions, all of which could pressure profitability.
PPL Stock’s Earnings Estimate Moving North
PPL expects 2026 earnings to be $1.90-$1.98 per share. The Zacks Consensus Estimate for PPL’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.73% and 8.21%, respectively.
Image Source: Zacks Investment Research
The same for FirstEnergy’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.06% and 7.73%, respectively.
PPL’s Debt to Capital
Utility operations are capital-intensive and companies in this sector often need to borrow to fund long-term projects when internal resources are insufficient. The company is also borrowing funds to meet its capital requirements.
PPL’s current debt to capital is 57.4% compared with its industry average of 59.94%. This shows the company is utilizing lower debts than peers to run its operations.
Image Source: Zacks Investment Research
Another utility, Exelon Corporation (EXC - Free Report) , has strong transmission and distribution operations and is investing strategically to further expand its infrastructure. Exelon has plans to invest $41.3 billion in the 2026-2029 period to further strengthen its operations. EXC’s debt to capital is currently pegged at 63.31%, which is higher than its industry average.
PPL Stock Trades at a Premium
PPL Corporation is currently valued at a premium compared with its industry on a forward 12-month P/E basis. The stock is trading at a P/E F12M of 17.55X compared with its industry’s 15.7X.
Image Source: Zacks Investment Research
Exelon is currently trading at a discount compared with its industry at a P/E F12M of 15.2X.
PPL’s Return Is Lower Than the Industry
Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than peers.
PPL’s trailing 12-month ROE is 9.41%, lower than the industry average of 11.08%.
Image Source: Zacks Investment Research
Rounding Up
PPL Corporation is strengthening its grid through major infrastructure investments, IT modernization and an expanded $23 billion capital expenditure plan, which supports a 10.3% rate base CAGR while improving system reliability and resilience. The company is also benefiting from rising data center-driven load growth and timely rate recovery, which enables it to efficiently fund the long-term projects.
However, PPL Corporation is currently trading at a premium valuation and generating returns below the industry average. As a result, investors may be better off avoiding this Zacks Rank #4 (Sell) stock for now and wait for a more attractive entry point.
View the Zacks #1 Rank List
Image: Bigstock
PPL Underperforms Its Industry in a Year: How to Play the Stock?
Key Takeaways
PPL Corporation’s (PPL - Free Report) shares have gained 1% in the past six months compared with the Zacks Utility-Electric Power industry’s rise of 17.6%. The company also underperformed the Zacks Utilities sector in the same time frame.
PPL Corporation has delivered an average negative earnings surprise of 2.07% over the past four quarters, while increasing competition in the transmission business could continue to pressure its operations. Yet, the company stands to benefit from growing data center demand, especially in Pennsylvania and Kentucky, where such facilities require substantial electricity consumption.
Price Performance (One Year)
Image Source: Zacks Investment Research
Another operator in the same space, FirstEnergy Corp. (FE - Free Report) , is making a substantial investment to strengthen its infrastructure to provide reliable services to customers. The company’s earnings surpassed estimates in three out of the past four reporting quarters and its shares have gained 5.5% in the past year.
Should investors consider adding PPL to their portfolio based on the current softness in price movements? Let us delve deeper and find out the factors that can help investors decide whether it is a good entry point to add PPL stock to their portfolios.
Factors Strengthening PPL Corporation’s Outlook
PPL is also benefiting from economic growth and rising data center demand across its service territories. In Pennsylvania, advanced-stage data center demand has increased to nearly 28.3 gigawatt (“GW”) from 25.2 GW, while Kentucky’s economic development pipeline now indicates potential load growth of 12.9 GW through 2032, up from the earlier estimate of 8.5 GW.
PPL Corporation plans to invest nearly $23 billion between 2026 and 2029, targeting an average annual rate base growth of around 10.3% through 2029. The company’s focus on generation, transmission and distribution projects, along with ongoing infrastructure upgrades, has helped improve service reliability and reduce customer outages.
More than 60% of PPL’s capital investment plan qualifies for “contemporaneous recovery,” which mitigates the effects of regulatory lag on earnings. This expedited recovery of capital expenditures enables the company to efficiently fund its long-term projects.
PPL Corporation utilizes a “self-healing grid” through its smart grid technology, enabling the system to automatically identify outages and redirect power to reduce customer disruptions. The advanced infrastructure also delivers real-time data, supporting proactive maintenance and improving overall grid reliability and operational efficiency.
Headwinds for PPL Stock
PPL Corporation faces challenges from high capital investment needs, project execution and cost-recovery risks, and rising competition in Pennsylvania’s transmission market. The company also remains exposed to weather-related demand fluctuations, operational and cyber risks, equipment failures, and fuel supply disruptions, all of which could pressure profitability.
PPL Stock’s Earnings Estimate Moving North
PPL expects 2026 earnings to be $1.90-$1.98 per share. The Zacks Consensus Estimate for PPL’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.73% and 8.21%, respectively.
Image Source: Zacks Investment Research
The same for FirstEnergy’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.06% and 7.73%, respectively.
PPL’s Debt to Capital
Utility operations are capital-intensive and companies in this sector often need to borrow to fund long-term projects when internal resources are insufficient. The company is also borrowing funds to meet its capital requirements.
PPL’s current debt to capital is 57.4% compared with its industry average of 59.94%. This shows the company is utilizing lower debts than peers to run its operations.
Image Source: Zacks Investment Research
Another utility, Exelon Corporation (EXC - Free Report) , has strong transmission and distribution operations and is investing strategically to further expand its infrastructure. Exelon has plans to invest $41.3 billion in the 2026-2029 period to further strengthen its operations. EXC’s debt to capital is currently pegged at 63.31%, which is higher than its industry average.
PPL Stock Trades at a Premium
PPL Corporation is currently valued at a premium compared with its industry on a forward 12-month P/E basis. The stock is trading at a P/E F12M of 17.55X compared with its industry’s 15.7X.
Image Source: Zacks Investment Research
Exelon is currently trading at a discount compared with its industry at a P/E F12M of 15.2X.
PPL’s Return Is Lower Than the Industry
Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than peers.
PPL’s trailing 12-month ROE is 9.41%, lower than the industry average of 11.08%.
Image Source: Zacks Investment Research
Rounding Up
PPL Corporation is strengthening its grid through major infrastructure investments, IT modernization and an expanded $23 billion capital expenditure plan, which supports a 10.3% rate base CAGR while improving system reliability and resilience. The company is also benefiting from rising data center-driven load growth and timely rate recovery, which enables it to efficiently fund the long-term projects.
However, PPL Corporation is currently trading at a premium valuation and generating returns below the industry average. As a result, investors may be better off avoiding this Zacks Rank #4 (Sell) stock for now and wait for a more attractive entry point.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.