PPL vs. DUK: Which Utility Stock Makes a Stronger Investment Case?

The Zacks Utility Electric - Power industry is undergoing a significant transformation, driven by the increasing demand for electricity due to data center expansion, electrification of transportation, and grid modernization initiatives. Utilities are investing heavily in infrastructure to enhance grid resilience, strengthen transmission and distribution lines, integrate renewable energy sources, and meet regulatory requirements. This sector is characterized by stable cash flows, consistent returns, payment of regular dividends and substantial capital expenditures aimed at long-term growth and sustainability. Two prominent companies in the utility space are PPL Corporation PPL and Duke Energy Corporation DUK.

PPL is strategically positioned to capitalize on the increasing electricity demand across its service territories. The company will invest $20 billion from 2025 to 2028 to strengthen its infrastructure. This investment focuses on grid hardening and accommodating increased electrification. Investments will also focus on new technology and support increasing demand from data centers.

Duke Energy is expanding its infrastructure to meet the surging power demand in its service areas due to the development of data centers and customer growth. The company expects to spend $83 billion during the 2025-2029 period, allocating the funds toward grid modernization and the transition to low-carbon energy sources.

Per the latest release of the U.S. Energy Information Administration, demand for electricity is rising in the United States, and a clear transition toward clean energy sources is evident in the Utilities space. Amid such an industry backdrop, let’s delve deep and closely look at the fundamentals of these stocks.

PPL & DUK’s Earnings Growth Prospects

The Zacks Consensus Estimate for PPL’s 2025 and 2026 earnings reflect year-over-year growth of 7.69% and 8.24%, respectively. Long-term (three to five years) earnings growth per share is pegged at 7.46%.

PPL Earnings Estimates

The Zacks Consensus Estimate for DUK’s 2025 and 2026 earnings reflect year-over-year growth of 7.12% and 6.24%, respectively. Long-term (three to five years) earnings growth per share is pegged at 6.33%.

DUK Earnings Estimates

Return on Equity (ROE)

ROE measures how efficiently the company is utilizing its shareholders’ funds to generate profits. PPL’s current ROE is 8.88% compared with DUK’s ROE of 9.50%. ROE of both companies is a bit lower than their industry’s ROE of 9.77%.

Long-Term Capital Expenditure Plans

Utility operations are capital-intensive, and a large investment is required for proper maintenance and expansion of operations. The decline in interest rates will definitely assist the utilities as it will reduce the cost of long-term capital projects.

PPL’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing far fewer outages, courtesy of the ongoing investments in strengthening its infrastructure. PPL expects a regulated capital investment plan of $20 billion during 2025-2028.

Duke Energy is currently focused on expanding its scale of operations, implementing modern technologies at its facilities, and enhancing its renewable generation portfolio by investing heavily in infrastructure and expansion projects. DUK expects to spend $83 billion during the 2025-2029 period to strengthen its operations.

PPL & DUK are Trading at a Premium

PPL is trading at forward earnings multiple of 19.54X, above its median of 16.72X over the last five years. DUK’s forward earnings multiple sits at 18.7X, above its median of negative 17.64X over the last five years.

PPL & DUKs Dividend Yield

Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for PPL is 2.99%, while the same for DUK is 3.46%. The dividend yields of both companies are better than the Zacks S&P 500 Composite’s average of 1.65%.

Price Performance

In the past year, PPL shares have gained 32.4% compared with DUK’s return of 23.1%. Both companies outperformed the industry’s rally of 16.8%.

Price Performance (One Year)

Conclusion

PPL and Duke Energy are making significant investments to modernize their infrastructure and meet rising electricity demand in their service region. Both stocks have huge potential in the energy space and can offer significant growth opportunities for investors.

Both companies currently have a Zacks Rank of 3 (Hold). Based on the above discussion, we conclude PPL currently has a marginal edge over Duke Energy.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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