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How PPL Looks ahead of Its 1Q17 Earnings

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Part 3
How PPL Looks ahead of Its 1Q17 Earnings PART 3 OF 7

These Factors Could Drive PPL’s 1Q17 Earnings

PPL’s earnings

Analysts estimate that PPL (PPL) will report earnings per share (or EPS) of $0.64 in 1Q17. It earned $0.67 per share in 1Q16.

PPL management set its 2017 full-year earnings guidance range at $2.05 to $2.25 per share. In 2016, PPL earned $2.45 per share. PPL expects a long-term earnings growth rate of 5%–6%, in line with the industry average (XLU).

These Factors Could Drive PPL’s 1Q17 Earnings

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Earnings drivers

PPL surprised Wall Street in the last quarter with better-than-expected 4Q16 earnings. The United Kingdom’s Brexit referendum was expected to have a negative impact on its cash flows due to the company’s significant operations in the United Kingdom. However, the company’s hedging strategies and the strong performance by its domestic utilities boosted its quarterly earnings.

On average, PPL has hedged 90% of its cash flows through 2019. According to the company’s management, PPL will be able to achieve a 5% per share earnings growth rate in the long term even if the exchange rate falls to as low as $1.09 per pound.

PPL expects flattish load growth in both its domestic as well as UK markets. Its consistent investments in rate bases may drive its earnings in the long term. PPL’s UK operations are expected to grow 6%–8% while domestic utilities are expected to grow by 4%–6%.

PPL’s large-cap peer Southern Company (SO) is expected to report its 1Q17 earnings on May 2, while Duke Energy (DUK) will report its earnings on May 9, 2017. NextEra Energy (NEE) will report its earnings on April 21, 2017.

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