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PPL (PPL) Down 0.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for PPL (PPL - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

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

PPL Corp’s Earnings and Revenues Beat Estimates in Q3

PPL Corporation reported third-quarter 2018 adjusted earnings per share of 59 cents, beating the Zacks Consensus Estimate of 56 cents by 5.4%. Earnings improved 5.4% year over year, primarily driven by higher earnings in the U.K. and Pennsylvania segments.

On a GAAP basis, the company reported earnings per share of 62 cents in the quarter compared with 51 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 $1,872 million in the third quarter, beating the Zacks Consensus Estimate of $1,859 million by 0.7%.  Revenues also improved 1.5% year over year.

Segment Results

U.K. Regulated:
Adjusted earnings increased 25% from the prior-year quarter to 30 cents per share. The upside was primarily supported by higher foreign currency exchange rates, increased pension income, improved sales volumes and hiked prices effective Apr 1, 2018.

Kentucky Regulated: Adjusted earnings were 17 cents, down from 18 cents in the year-ago quarter. Higher operation and maintenance expenses and the effect of share dilution hurt segment results.

Pennsylvania Regulated: Adjusted earnings increased 23% from the prior-year quarter to 16 cents per share. The results benefited from returns on additional capital investments in transmission, higher sales volumes primarily due to favorable weather, and lower operation and maintenance expenses.

Corporate and Other: The segment reported a loss of 4 cents in the quarter against 1 cent earnings in the prior-year quarter. The deterioration was due to income taxes and financing costs.

Operational Highlights

PPL Corp’s total operating expenses increased 7% year over year to $ 1,186 million in the reported quarter.

The company reported operating income of $686 million, lower than $736 million in the prior-year quarter.

Interest expenses increased 6% to $244 million from the year-ago quarter’s $230 million.

Financial Position

As of Sep 30, 2018, PPL Corp had cash and cash equivalents of $842 million compared with $485 million as of Dec 31, 2017.

Long-term debt (excluding debts due within a year) was $19,924 million as of Sep 30, 2018, compared with $19,847 million at the end of 2017.

Net cash flow from operating activities at the end of the first nine months of 2018 was $2,210 million compared with $1,754 million in the year-ago period.

Guidance

PPL Corp lifts guidance for 2018 earnings per share from ongoing operations to $2.30-$2.40 from the earlier expectation of $2.25-$2.40 with an increased midpoint of $2.35 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 downward path over the past two months.

VGM Scores

At this time, PPL has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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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