On February 15, PPL Corporation (PPL) stock was trading at an EV-to-EBITDA[1. Enterprise value to earnings before interest, tax, depreciation, and amortization] valuation multiple near 10.2x. Its five-year historical average and industry average multiples are around 11x. PPL stock appears to be trading at a fair valuation compared to its historical valuation as well as the industry average.
The second-largest utility by market capitalization, Duke Energy (DUK), is trading at an EV-to-EBITDA valuation of 11.4x—compared to its five-year historical average of 11x. Peer Xcel Energy (XEL) is trading at a valuation of 10.2x. Southern Company (SO) is trading at a valuation multiple of 10.5x—close to its historical average.
PPL stock has been on a steep downtrend over the last few months. In the last year, it has corrected more than 12% while the Utilities Select Sector SPDR ETF (XLU), which tracks the S&P 500 Utilities Index, has fallen nearly 8%.
To learn more about utilities’ recent fall and opportunities, see S&P 500 Utilities at a 52-Week Low Offer a Big Gain Potential.