It has been about a month since the last earnings report for PPL (PPL). Shares have added about 7.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PPL due for a pullback? 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 drivers.
PPL Corporation's Q4 Earnings Top, Revenues Miss Estimates
PPL Corporation delivered fourth-quarter 2018 adjusted earnings per share of 52 cents, beating the Zacks Consensus Estimate of 49 cents by 6.1%. The figure declined 5.4% year over year, primarily due to lower earnings in the Pennsylvania and Kentucky Regulated segments.
On a GAAP basis, the company generated EPS of 57 cents compared with 11 cents in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to a gain in U.K. Regulated segment.
In 2018, the company delivered adjusted earnings of $2.40 per share, up from $2.25 in 2017.
PPL Corporation posted revenues of $1,939 million in the fourth quarter, which missed the Zacks Consensus Estimate of $1,950 million by 0.6%. Nevertheless, the figure improved 0.7% year over year.
In 2018, the company posted revenues of $7,785 million, up from $7,447 million in 2017.
U.K. Regulated: Adjusted earnings increased 10.3% from the prior-year quarter’s tally to 32 cents per share. The upside was primarily supported by higher foreign currency exchange rates, increased pension income and hiked prices effective from Apr 1, 2018.
Kentucky Regulated: Adjusted earnings were 11 cents, down from 14 cents in the year-ago quarter. The decline was primarily caused by higher operation and maintenance expense as well as other factors.
Pennsylvania Regulated: Adjusted earnings fell 7% from the prior-year quarter’s tally to 13 cents. The results were affected by higher operation and maintenance expense, higher depreciation expense as well as the effect of share dilution.
Corporate and Other: The segment reported a loss of 4 cents in the quarter, which was wider that a loss of 2 cents in the prior-year quarter.
PPL Corporation’s total operating expenses increased 8.9% year over year to $ 1,282 million in the reported quarter.
The company reported operating income of $657 million, lower than $749 million in the prior-year quarter.
Interest expenses increased 5.6% to $245 million from the year-ago quarter’s tally of $232 million.
As of Dec 31, 2018, the company had cash and cash equivalents of $621 million compared with $485 million as of Dec 31, 2017.
Long-term debt (excluding debts due within a year) was $20,069 million as of Dec 31, 2018 compared with $19,847 million at the end of 2017.
Net cash flow from operating activities at the end of 2018 was $2,821 million compared with $2,461 million a year ago.
PPL Corporation announced guidance for 2019 EPS from ongoing operations in the range of $2.30-$2.50 with a midpoint of $2.40 which is lower than the Zacks Consensus Estimate of $2.44.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, PPL has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, 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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