How Should You Play PPL Stock Ahead of Q2 Earnings Release?

PPL Corporation PPL is expected to report second-quarter 2025 results on July 31, before market open. 

The Zacks Consensus Estimate for earnings is pegged at 38 cents per share, indicating no change year over year. The Zacks Consensus Estimate for revenues is pinned at $1.99 billion, indicating growth of 5.9% from the year-ago reported figure.

PPL’s Earnings Surprise History

PPL’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one, delivering an average surprise of 8.84%.

What Our Quantitative Model Predicts

Our proven model does not predict an earnings beat for PPL this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is -2.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, PPL carries a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here.

Stocks Worth a Look

Some stocks in the same industry that have the combination of factors indicating an earnings beat are Eversource Energy ES, IDACORP IDA and Xcel Energy XEL.  ES, IDA and XEL have an Earnings ESP of +0.26%, +2.34% and +1.76%, respectively, and hold a Zacks Rank #3 each at present.

Factors That Might Have Impacted PPL’s Q2 Performance

PPL’s quarterly earnings are likely to have continued to benefit from the ongoing cost reduction initiatives and energy efficiency programs designed to help customers. The company is also working to provide more reliable, affordable and cleaner energy to its customers by deploying smart grid technology, automation and data science.

Earnings are expected to have benefited from Rhode Island Energy’s vegetation management program. This initiative is focused on enhancing safety and reliability of its services. 

PPL is experiencing load growth, driven by data center demand. It might have benefited from the rising demand for data centers, as the new AI-driven data centers require more electricity. Expected higher sales volume in the Pennsylvania and Kentucky regions is likely to have boosted quarterly earnings.

Ongoing system investments by PPL’s subsidiaries, Louisville Gas and Electric Company and Kentucky Utilities Company, have resulted in a reduction in power outage frequency (by 40%) and duration (by 30%). These investments for infrastructure upgrades are likely to have had a positive impact in the to-be-reported quarter.

PPL Stock Price Performance

In the past month, the stock has returned 8.9% compared with the industry’s growth of 1.2%.

PPL Stock Trading at a Premium

PPL is trading at a premium relative to the industry, with a forward 12-month price-to-earnings of 19.18X compared with the industry average of 15.02X.

PPL Stock Returns Lower Than Its Industry

Return on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. PPL’s trailing 12-month ROE is 9.14%, lower than the industry average of 10.41%.

Investment Consideration for PPL

PPL plans to invest $20 billion during 2025-2028. The capital investment for 2025 and 2026 is expected to be $4.3 billion and $5.2 billion, respectively. PPL’s strategic investments are focused on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing far fewer outages, courtesy of the company’s initiative to further strengthen its infrastructure.

PPL operates in a constructive regulatory jurisdiction. More than 60% of its capital investment plan is subject to contemporaneous recovery, and this reduces the impact of regulatory lag on earnings for investments.

PPL is working on its “Utility of the Future” strategy and initiated an IT transformation effort to move to common systems across the company. It has also developed common design and operations standards across its utilities. This includes more robust engineering and construction specifications to strengthen and automate the grid to mitigate increasing weather and storm risks. These measures should increase the resilience of its services and enable it to serve the rising demand from customers efficiently.

As of March 31, 2025, PPL had an unused credit capacity of nearly $2.81 billion, which further enhanced its liquidity. Its times-interest-earned ratio was 2.7 at the end of the first quarter of 2025. The strong ratio indicates that the company will be able to meet interest obligations in the near future without any difficulties.

End Note

PPL is expected to continue to benefit from rising demand in its service territories, cost savings initiatives, energy efficiency programs and investments in infrastructure upgrades to help serve customers more efficiently. 

Strong liquidity, grid upgrades and load growth driven by data center demand act as tailwinds for the company. However, given PPL’s premium valuation and lower ROE, current investors may hold onto the stock at present.

 

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This article originally published on Zacks Investment Research (zacks.com).

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