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PPL Stock Looks Attractive before Its Q1 Earnings

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Apr. 26 2019, Published 7:05 a.m. ET

Analysts’ target prices

Analysts’ consensus gave PPL (PPL) stock a mean target price of $32.1, which implies an estimated upside of 4.3% for the next 12 months. Currently, PPL is trading at $30.8.

Among the 14 Reuters-surveyed analysts tracking PPL, eight recommended a “hold,” two recommended a “strong buy,” two recommended a “buy,” and two recommended a “sell.”

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Why PPL?

PPL stock is trading at 12.5x its forward earnings—lower than peers’ average multiple of 17x–18x. PPL’s historical average valuation is close to 14x. PPL stock appears to be at a notable discount compared to its peers. Along with PPL’s fair expected earnings growth, its premium dividend yield makes it stand tall among its peers. Currently, PPL is offering a yield of 5.3%, which is higher than utilities’ (XLU) average of 3.1%.

Peer comparison

Among the 15 analysts covering Xcel Energy (XEL), two recommended a “strong buy,” two recommended a “buy,” and ten recommended a “hold.” Analysts’ mean target price of $55.8 for Xcel Energy stock implies flattish movement compared to its current price of $56.0. Xcel Energy stock is trading at 21x its forward earnings, which is higher than PPL and peers’ average. Xcel Energy offers a yield of 3%. So far, the stock has risen 14% in 2019.

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