We reaffirm our Neutral recommendation on
PPL Corporation
(
PPL
). The company currently has a short-term Zacks Rank #3 (Hold).
Why the Reiteration?
We view PPL Corporation as an organization with a well
diversified asset portfolio and business model, which is
adaptable to a wide range of market scenarios. This diverse
generation mix positions the company to benefit from proposed
Environmental Protection Agency regulations.
In addition, the company continues to focus on maintaining a
strong credit profile and liquidity position. As of Sep 30, 2012,
PPL Corporation had $946 million in cash and $4.6 billion
available under its domestic credit facilities. This financial
condition enables the company to follow steady inorganic growth
strategy and deal with the after-effects of the Hurricane Sandy.
However, we are skeptical about the risks associated with delay
and cancellation of several important projects, and impacts of
stringent regulations, which may to some extent, impede the
company's future growth.
Effects of the negative factors, along with impacts of the
Hurricane Sandy, have also been reflected on the Zacks Consensus
Estimates. As per the Zacks Consensus Estimates, the company's
fourth-quarter and full-year 2012 earnings per share were 46
cents and $2.36, respectively, which were lower than the year-ago
figures.
For full-year 2012, PPL Corporation increased its earnings
guidance to the range of $2.30 - $2.40 per share from its earlier
projection of $2.15 - $2.45 per share primarily due to strong
performance from Western Power Distribution plc's Midlands
utilities division.
Other Stocks to Consider
Other stocks in the utility sector that are presently doing
favorable business include
Huaneng Power International, Inc.
(
HNP
) and
Pike Electric Corporation
(
PIKE
). Both these companies currently carry a short-term Zacks Rank
#1 (Strong Buy).
Allentown, Pennsylvania-based PPL Corporation generates and
delivers electricity and natural gas to more than 10 million
customers in the U.S. and UK.
HUANENG POWER (HNP): Free Stock Analysis
Report
PIKE ELECTRIC (PIKE): Free Stock Analysis
Report
PPL CORP (PPL): Free Stock Analysis Report
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