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Why Is PPL (PPL) Up 7.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for PPL (PPL - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.

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

PPL Corp Beats Q2 Earnings Estimates, Raises Guidance

PPL Corporation  reported second-quarter 2018 adjusted earnings per share of 55 cents, beating the Zacks Consensus Estimate of 54 cents by 1.9%. Earnings also improved 6% year over year. The upside was primarily driven by strong U.K. Regulated segment performance.

On a GAAP basis, the company reported earnings per share of 73 cents in the quarter compared with 43 cents a year ago. The difference between GAAP and operating earnings in the reported quarter was due to the adjustment of special items.

Total Revenues

PPL Corp posted revenues of $1,848 million in the second quarter, beating the Zacks Consensus Estimate of $1,749 million by 5.7%.  Revenues also improved 7.1% year over year.

Segment Results

U.K. Regulated: Adjusted earnings increased 16.1% from the prior-year quarter to 36 cents per share. The upside was primarily supported by higher foreign currency exchange rates, increased pension income, improved sales volumes and hiked prices effective from Apr 1, 2018.

Kentucky Regulated: Adjusted earnings were 12 cents, in line with the year-ago quarter. Segment results were primarily driven by higher base electricity and gas rates effective Jul 1, 2017 and increased sales volumes due to favorable weather conditions.

Pennsylvania Regulated: Adjusted earnings in the quarter were 11 cents, on par with the year-ago quarter. The results benefited from returns on additional capital investments in transmission.

Corporate and Other: The segment reported a loss of 4 cents in the quarter compared with a loss of 2 cents in the prior-year quarter. The deterioration was due to effect of income taxes.

Operational Highlights

PPL Corp’s total operating expenses increased 11.5% year over year to $ 1,190 million in the reported quarter.

The company reported operating income of $658 million, in line with the prior-year quarter.

Interest expenses increased 6% to $235 million from the year-ago quarter’s $222 million.

Financial Position

As of Jun 30, 2018, PPL Corp. had cash and cash equivalents of $852 million compared with $485 million as of Dec 31, 2017.

Long-term debt (excluding debts due within one year) was $20,217 million as of Jun 30, 2018, compared with $19,847 million at the end of 2017.

Net cash flow from operating activities at the end of first-half 2018 was $1,325 million compared with $790 million at the end of first-half 2017.

Guidance

PPL Corp lifts guidance for 2018 earnings per share from ongoing operations to $2.25-$2.40 from earlier expectation of $2.20-$2.40 per share.

The company continues to expect 5% to 6% compound annual earnings growth per share from 2018 through 2020 off its original 2018 ongoing earnings forecast midpoint of $2.30 per share.

 

 

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

Currently, PPL has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 #3 (Hold). We expect an in-line return from the stock in the next few months.




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