On Apr 11, 2013, the shares of PPL Corporation (PPL) climbed to its 52-week high of $31.95 driven by its strong liquidity position, diversified asset portfolio and steady inorganic growth strategy. The company had reported solid fourth-quarter results with a positive earnings surprise of 6.52%. Positive earnings surprises were witnessed in all the four quarters of 2012, with an average beat of 10.71%.
As of Dec 31, 2012, PPL Corp. had $901 million in cash and $4.7 billion available under its domestic credit facilities. This financial position enables the company to follow steady organic as well as inorganic growth strategies.
As announced in February, PPL Corp.’s unit PPL Electric Utilities will invest around $1 billion to upgrade its transmission and distribution systems. This initiative will help the company to provide uninterrupted power to roughly 1.4 million customers. In addition, the company also has a strong project pipeline for this year, including ventures to minimize duration and size of outages.
PPL Corp. completed a number of acquisitions in 2012, including AES Ironwood, L.L.C and AES Prescott, L.L.C. These acquisitions provided an operational control of additional combined-cycle gas generation, which will subsequently improve its operational and financial positions by expanding the proportionate size of its regulated business.
Recently, the board of directors of PPL Corp. increased its quarterly dividend by 2.1% year over year to 36.75 cents per share. Including this hike, the company raised its dividend 11 times in the last 12 years. We believe the company’s practice of raising dividends from time to time will benefit the stock as it attracts investor attention.
PPL Corp. currently has a Zacks Rank #3 (Hold). However, other stocks from the industry that are presently performing better include Brookfield Infrastructure Partners L.P. (BIP), Empresa Nacional de Electricidad S.A. (EOC) and Pike Electric Corporation (PIKE). All the three stocks carry a Zacks Rank #1 (Strong Buy).
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