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PPL Stock: How It’s Valued Compared to Peers

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Valuation

On December 19, 2017, PPL Corporation (PPL) stock was trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple near 10.5x. Its five-year historical average and industry average multiples are near 11x. PPL seems to be trading at a fair valuation compared to its historical and industry average multiples.

The EV-to-EBITDA multiple gives a comparative idea of a company’s valuation, regardless of its capital structure. EV is the combination of a company’s market capitalization and debt minus its cash holdings.

PPL stk

In comparison, Duke Energy (DUK) is trading at an EV-to-EBITDA valuation above 12x, while NextEra Energy (NEE) has its valuation multiple beyond 13x.

PE multiple

PPL seems to be trading at a fair valuation considering its PE (price-to-earnings) multiple as well. Currently, it’s trading at a PE multiple of 15x.

US utilities (XLU) (IDU) are currently trading at a PE ratio of 20x. Historically, they traded near a PE ratio of 14x–15x.

Duke Energy’s PE ratio is near 21x, while NextEra Energy’s PE ratio is ~19x.

To learn more about broader utilities’ recent performance and their valuation, read Utilities Weekly Review: How These Defensives Have Played Out.

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