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PPL Corporation Just Missed Earnings - But Analysts Have Updated Their Models

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Simply Wall St
·4 min read
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It's shaping up to be a tough period for PPL Corporation (NYSE:PPL), which a week ago released some disappointing full-year results that could have a notable impact on how the market views the stock. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at US$7.6b, statutory earnings missed forecasts by an incredible 38%, coming in at just US$0.38 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on PPL after the latest results.

Check out our latest analysis for PPL

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from PPL's six analysts is for revenues of US$8.03b in 2021, which would reflect an okay 5.6% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 26% to US$2.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.15b and earnings per share (EPS) of US$2.43 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

There were no changes to revenue or earnings estimates or the price target of US$30.12, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on PPL, with the most bullish analyst valuing it at US$32.00 and the most bearish at US$28.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting PPL's growth to accelerate, with the forecast 5.6% growth ranking favourably alongside historical growth of 0.7% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.1% per year. PPL is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on PPL. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for PPL going out to 2023, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 1 warning sign for PPL that you should be aware of.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.