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Looking at PPL Corporation's (NYSE:PPL) earnings update in March 2019, analyst forecasts appear to be pessimistic, with earnings expected to decline by 1.9% in the upcoming year compared with the past 5-year average growth rate of 5.4%. Presently, with latest-twelve-month earnings at US$1.8b, we should see this fall to US$1.8b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for PPL in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
How is PPL going to perform in the near future?
Over the next three years, it seems the consensus view of the 12 analysts covering PPL is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, PPL's earnings should reach US$2.0b, from current levels of US$1.8b, resulting in an annual growth rate of 5.4%. This leads to an EPS of $2.65 in the final year of projections relative to the current EPS of $2.59. Margins are currently sitting at 23%, approximately the same as previous years. With analysts forecasting revenue growth of 0.10068 and PPL's net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you're building an investment case for a stock. For PPL, I've put together three fundamental factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is PPL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether PPL is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of PPL? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.