PPL Stock Outperforms its Industry in a Year: Time to Buy?

PPL Corp.’s PPL shares have rallied 24% year to date compared with Zacks Utility-Electric Power industry’s growth of 17.4%. The company continues to provide electricity and natural gas to its 3.5 million customers across the United States. In the same time period, PPL has also outperformed the Zacks Utilities sector. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.PPL has plans to invest $14.3 billion through 2027 to strengthen its infrastructure and prevent outages. The company is also working to lower emissions from electricity production and develop a net-zero energy system by 2050.PPL Outperforms Industry and Sector (One year) Image Source: Zacks Investment ResearchPPL stock is trading above its 200-day simple moving average (SMA), signaling a bullish trend.PPL Trades Above 200-Day SMAImage Source: Zacks Investment ResearchThe 200-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of a stock’s uptrend or downtrend.Should you consider adding PPL stock to your portfolio only based on positive price movements? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add PPL stock to their portfolio.Factors Acting as a Tailwind for PPL StockPPL is experiencing load growth, driven by data center demand in its Pennsylvania and Kentucky service territories. PPL can benefit from the rising demand for data centers, as the new AI-driven data centers require more electricity than conventional data centers. The company can experience more demand from the data centers with more than 17 GWs of potential projects in the queue for the 2026-2033 period.PPL is managing its operations efficiently and reducing its operation and maintenance expenses by an average of 2.5% annually. The company aims to deliver at least $175 million of annual savings by 2026 from 2021. The efficiency drive keeps the rates affordable for customers and will attract more customers.A clear transition is evident in the U.S. electricity generation space, with operators working to reduce emission levels. PPL, too, has a plan to reduce carbon emissions from its production process. The carbon emission reduction target is presently following the international climate policy goal to limit global warming within 2 Celsius above pre-industrial levels. PPL plans to achieve its carbon emissions target of 70% by 2035 and 80% by 2040 from its 2010 levels.PPL is involved in more than 175 research and development projects. It is also in partnership with more than 30 industry and academic partners. These projects are expected to help accelerate low-carbon energy technologies to strengthen network resiliency and build the future grid.PPL operates in a constructive regulatory jurisdiction. Over 60% of PPL’s capital investment plan is subject to “contemporaneous recovery,” and it reduces the impact of regulatory lag on earnings for investments. The recovery of capital expenditure quickly allows the company to fund long-term projects easily.PPL Stock’s Earnings Surprise HistoryThe company has been a stable performer and has outperformed the Zacks Consensus Estimate in the last four reported quarters, with an average beat of 9.85%.Image Source: Zacks Investment ResearchPPL’s Earnings Estimates Moving UpPPL expects its 2024 EPS in the range of $1.63-$1.73 compared with $1.60 per share registered in 2023. The Zacks Consensus Estimate for PPL’s 2024 and 2025 earnings per share indicates year-over-year growth of 7.5% and 6.8%, respectively. Another company operating in this space, IDACORP's IDA Zacks Consensus Estimate for 2024 and 2025 earnings per share indicates year-over-year growth of 5.5% and 8.3%, respectively. Image Source: Zacks Investment ResearchPPL Stock’s ROA Better Than the IndustryPPL’s trailing 12-month return on assets is 3.25%, ahead of the industry average of 3.05%. Return on asset (ROA) is a financial ratio that measures how well a company uses its assets to generate profit. The current ROA of the company indicates that it is using its assets more efficiently than its peers.Image Source: Zacks Investment ResearchPPL Raises Shareholders’ ValuePPL continues to return value to its shareholders through dividend payments.The company’s current annual dividend is $1.03. PPL projects dividend growth of 6-8% per year through 2027, subject to the approval of its board of directors. The dividend growth expectation is on par with its earnings growth expectation. PPL has raised its annual dividend four times in the past five years.PPL’s payout ratio at the end of 2023 was 59%. With continued strength in its earnings and cash flow growth, the company is expected to continue boosting its dividend going forward. Check PPL’s dividend history here.PPL Stock Trading at a PremiumPPL is currently valued at a premium compared to its industry on a forward 12-month P/E basis. The current P/E F12M of the company is 17.46X compared with the industry’s average of 15.03X. Image Source: Zacks Investment ResearchFinal Take on PPLPPL's investment in increasing clean energy production volumes and strengthening its grid will help the company provide reliable service to its customers. Efficient management of operations and constructive regulatory jurisdiction add to the company’s advantage.The improvement in earnings estimates and return on assets makes it attractive. However, due to its current premium valuation, investors should wait for a better entry point.Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolio.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PPL Corporation (PPL): Free Stock Analysis Report IDACORP, Inc. (IDA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks