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PPL Stock Looks Attractive Compared to Its Peers

Vincent Kruger
PPL Stock Looks Attractive Compared to Its Peers

Why PPL Stock Looks Attractive Compared to Its Peers## PPL’s valuationAfter a steady rally in the last few months, profit-booking took utilities down. The recent weakness in these defensives could be an opportunity for investors due to their discounted valuation. PPL (PPL), a mid-sized regulated utility, is trading at a forward PE ratio of 11x based on analysts’ EPS estimates for 2019. PPL appears to be trading at a discounted valuation considering broader utilities’ average valuation close to 16x–17x.## PPL stock looks attractivePPL’s five-year historical average valuation is ~14x. PPL stock looks attractive compared to its historical valuation. PPL’s management expects its EPS to grow 5% annually for the next few years—in line with the industry average. PPL’s regulated operations bode well for stable and predictabile earnings.PPL stock offers a dividend yield of 5.8%—the highest among the top utilities with an average yield of ~3.4%. To learn more, read How PPL’s Dividend Profile Looks Going into 2019.Xcel Energy (XEL), PPL’s peer and one of the top regulated utilities, is trading at a forward PE ratio of 18x—marginally lower than its five-year historical average. Consolidated Edison (ED) stock trades at a forward PE ratio of 17x.PPL stock underperformed its peers in 2018. The stock fell 8%, while the Utilities Select Sector SPDR ETF (XLU) rose 2% last year. Xcel Energy stock rose marginally, while Consolidated Edison fell 9% in 2018.Continue to Next PartBrowse this series on Market Realist: * Part 2 - What Do PPL’s Chart Indicators and Short Interest Suggest? * Part 3 - What PPL’s Implied Volatility Trends Indicate * Part 4 - PPL Stock: Analysts’ Recommendations