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Why Is PPL (PPL) Down 2.8% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for PPL (PPL). Shares have lost about 2.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PPL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

PPL Corp Misses Q1 Earnings and Revenue Estimates

PPL Corporation reported first-quarter 2019 adjusted earnings per share of 70 cents, which missed the Zacks Consensus Estimate of 73 cents by 4.1%. The figure declined 5.4% year over year, primarily due to lower earnings in the U.S. segments.

On a GAAP basis, the company generated EPS of 64 cents compared with 65 cents in the year-ago quarter. The difference between GAAP and operating earnings stemmed from expenses in the U.K. Regulated segment.

Total Revenues

The company generated revenues worth $2,079 million in the first quarter, which missed the Zacks Consensus Estimate of $2,196 million by 5.3%. The figure declined 2.2% year over year.

Segment Results

U.K. Regulated: Adjusted earnings increased 13.5% from the prior-year quarter’s figure to 42 cents per share. The upside was primarily supported by higher prices, pension income and foreign currency exchange rates as well as dilution.

Kentucky Regulated: Adjusted earnings were 16 cents, down from 19 cents in the year-ago quarter.  The decline was primarily caused by higher operation and maintenance expenses, lower sales volumes due to weather and increased depreciation expenses.         

Pennsylvania Regulated: Adjusted earnings fell 19% from the prior-year quarter’s figure to 17 cents. The results were affected by higher operation and maintenance expenses and increased depreciation expenses as well as the effect of share dilution.

Corporate and Other: The segment incurred a loss of 5 cents in the quarter compared with a loss of 3 cents in the prior-year quarter.

Operational Highlights

PPL Corp’s total operating expenses increased 1.8% year over year to $ 1,298 million in the quarter.

The company generated operating income of $781 million, lower than $851 million in the prior-year quarter.

Interest expenses inched up 0.8% to $241 million from the year-ago quarter’s tally of $239 million.

Financial Position

As of Mar 31, 2019, the company had cash and cash equivalents of $518 million compared with $621 million as of Dec 31, 2018.

Long-term debt (excluding debts due within a year) was $21,114 million as of Mar 31, 2019 compared with $20,069 million as of Dec 31, 2018.

Net cash flow from operating activities in first quarter was $474 million compared with $566 million in year-ago quarter.

Guidance

PPL Corp reaffirmed 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 $2.43.
 

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

Currently, PPL has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

PPL has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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