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PPL to Benefit From Capital Investments & Growth Strategy

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We issued an updated research report on PPL Corporation (PPL - Free Report) . The company is primarily engaged in electricity generation as well as delivery in the United States and the U.K. Also, it supplies natural gas in Kentucky.

Shares of PPL have increased 12.2% in the past six months compared with the industry’s rise of 5.2%.

What’s Driving the Stock?

The company’s asset portfolio and business model are made to be adaptable to various market scenarios. It continues to follow an organic growth strategy to expand and upgrade utility systems. The company expects to achieve annual earnings growth of 5-6% through 2020. The company anticipates net income growth of 8-10% from domestic operations and 7-9% from operations in the U.K. through 2020.

The company’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. The company projects total capital expenditure of $15.41 billion in the 2018-2022 period. The company expects to recover 68% of the investment within six months and 80% within a year, paving the way for growth and future investments.

On an average, the company is going to invest nearly $3 billion annually in the next five years to strengthen grid, expand renewable generation capacity and focus on new technology to serve customers more efficiently. PPL set target to reduce CO2 emission by 70% by 2050 from 2010 level. Notably, the company has been able to reduce emission by 50% till 2017.

However, stringent regulations, unplanned outages and high-debt levels amid rising interest rates are headwinds.

In the third quarter of 2018, the company’s earnings of 59 cents per share beat the Zacks Consensus Estimate of 56 cents by 5.4%.

Zacks Rank & Key Picks

PPL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks from the same industry are Ameren Corporation (AEE - Free Report) , FirstEnergy Corporation (FE - Free Report) and Xcel Energy Inc (XEL - Free Report) . All three stocks carry a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate of 2019 earnings for Ameren inched up 0.3% in the past 30 days. The company pulled off positive earnings surprise of 15.40% in the last four quarters.

The Zacks Consensus Estimate of 2019 earnings for FirstEnergy inched up 0.4% in the past 30 days. The company delivered average positive earnings surprise of 3.67% in the last four quarters.

The Zacks Consensus Estimate of 2019 earnings for Xcel Energy inched up 0.4% in the past 30 days. The company came up with average positive earnings surprise of 4.51% in the last four quarters.

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