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Is a Surprise in Store for PPL Corp (PPL) in Q1 Earnings?

Zacks Equity Research

We expect PPL Corporation PPL to surpass expectations when it reports first-quarter 2017 results after the market closes on May 4. Last quarter, the company delivered a positive earnings surprise of 15.38%.

Why a Likely Positive Surprise?

Our proven model shows that PPL Corporation is likely to beat estimates this quarter because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates and PPL Corporation has the right mix.

Zacks ESP: The Earnings ESP which represents the difference between the Most Accurate estimate of 63 cents and the Zacks Consensus Estimate of 62 cents is +1.61%. This is a meaningful indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

PPL Corporation Price and EPS Surprise

PPL Corporation Price and EPS Surprise | PPL Corporation Quote

Zacks Rank: PPL Corp. currently carries a Zacks Rank #3. The combination of PPL Corp.’s favorable Zacks Rank and positive ESP makes us reasonably confident of a positive surprise this season.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Factors to Consider

PPL Corp. has a diverse business portfolio that helps it to perform in and adapt to different market conditions. The company’s UK operation puts it at an advantageous position than its domestic-focused peers. Considering that nearly half of its income comes from the U.K., any tax reform in the U.S. will only impact its domestic business.

To protect itself from the price fluctuations in pound, the company reestablished its hedge levels. PPL Corp. hedged about 92–93% of the pound at an average rate of $1.21 per pound in 2017. This initiative is expected to guard the company from the foreign currency risk.

Warmer winter in its services territories might have an adverse impact on demand in the first quarter.

Other Stocks to Consider

PPL Corporation is not the only Utility – Electric Power company looking up this earnings season. We see likely earnings beats coming from these companies as well.

NiSource, Inc NI has an Earnings ESP of +6.15% and a Zacks Rank #2. It is slated to report first-quarter 2017 results on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dominion Resources, Inc. D has an Earnings ESP of +2.15% and a Zacks Rank #3. It is slated to report first-quarter 2017 result on May 4.

Pattern Energy Group Inc. PEGI has an Earnings ESP of +250% and a Zacks Rank #3. The company is scheduled to come up with first-quarter 2017 earnings report on May 9.

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