PPL Corp (PPL) Beats On Q3 Earnings, Misses On Revenues

PPL Corporation (NYSE:PPL) reported third-quarter 2016 adjusted earnings of 63 cents per share, topping the Zacks Consensus Estimate of 59 cents by 6.8%. Reported earnings also increased 23.5% on a year-over-year basis.

On a GAAP basis, the company posted earnings per share of 69 cents in the quarter, compared with 58 cents a year ago. The difference between GAAP and operating earnings in the reported quarter was due to 29 cents of foreign currency-related economic hedges, charges of 30 cents related to the settlement of foreign currency contracts,and 5 cents related to a change in the UK tax rate.

Total Revenue

PPL Corp.’s total revenue of $1,889 million missed the Zacks Consensus Estimate of $2,000 million but were up marginally from the year-ago tally of $1,878 million.

Segment Results

UK Regulated: Adjusted earnings of 35 cents per share surged 20.7% from the prior-year figure of 29 cents. This was primarily backed by the Apr 1, 2016 price increase, and lower operation and maintenance expenses, partially offset by lower sales volumes.

Kentucky Regulated: Adjusted earnings increased by 2 cents to 18 cents per share. This was primarily due to higher sales volumesowing to favorable weather.

Pennsylvania Regulated: Adjusted earnings in the reported quarter increased by 5 cents per share to 13 cents driven primarily by higher base electricity rates for distribution effective Jan 1, 2016, and higher transmission margins.

Corporate and Other: It includes unallocated corporate-level financing and other costs. Adjusted loss widened from 2 cents to 3 cents per share.

Operational Highlights

PPL Corp.’s total operating expenses decreased 7.5% year over year to $1,103 million in the reported quarter primarily due to lower energy purchases, and a decline in other operation and maintenance expenses.

The company registered operating income of $786 million, up 14.6% from $686 million a year ago.

Interest expenses were up marginally to $223 million from $221 million a year ago.

Financial Position

As of Sep 30, 2016, PPL Corp. had cash and cash equivalents of $416 million, compared with $836 million as of Dec 31, 2015.

Long-term debt (excluding debts due within one year) was $18,069 million as of Sep 30, 2016, compared with $18,563 million as of 2015 end.

In the first nine months of 2016, net cash flow from operating activities (continuing operations) was $2,230 million, compared with $1,688 million in the prior-year period.

Guidance

PPL Corp. narrowed its 2016 adjusted earnings guidance to the range of $2.30–$2.45 per share (midpoint: $2.38).Midpoint of the adjusted earnings guidance for UK Regulated, Kentucky Regulated and Pennsylvania Regulated are $1.41, 58 cents and 49 cents, respectively, for the year.

The company has reaffirmed its earnings guidance for 2017 in the range of $2.05–$2.25 per share (midpoint: $2.15).

The company expects annual earnings growth of 5–6% between 2017 and 2020.

Peer Releases

NextEra Energy, Inc. (NYSE:NEE) reported third-quarter 2016 adjusted earnings of $1.74 per share, outpacing the Zacks Consensus Estimate of $1.65 by 5.5%. The stock carries a Zacks Rank #3 (Hold).

WEC Energy Group (NYSE:WEC) reported third-quarter 2016 adjusted earnings of 69 cents per share, beating the Zacks Consensus Estimate of 60 cents by 15%. The stock carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Xcel Energy Inc. (NYSE:XEL) recorded third-quarter operating earnings of 90 cents per share, outpacing the Zacks Consensus Estimate of 87 cents by 3.5%. The stock carries a Zacks Rank #3.

Zacks Rank

PPL Corp. currently has a Zacks Rank #3.

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