PPL Trades Above 50 & 200-Day SMAs: Time to Buy or Hold the Stock?

PPL Corporation PPL is trading above its 50-day and 200-day simple moving averages (SMAs), signaling a bullish trend. The company has reposited itself as a U.S.-focused energy company after the divestiture of its international operation. Data centers are creating fresh demand in its service region.PPL has a well-chalked-out long-term capital expenditure plan to strengthen and expand its infrastructure to support the delivery of safe, reliable and affordable energy. The cost savings initiatives undertaken by the company will boost its margins.PPL's 50 & 200-Day SMAsImage Source: Zacks Investment ResearchThe 50 and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of a stock’s uptrend or downtrend.The PPL stock closed at $34.98 on Feb. 25. In the past year, the company’s shares have gained 33.4% compared with the industry’s 24.5% rally. PPL has outperformed the S&P 500’s growth of 18.4% and the Zacks Utilities sector’s rise of 18.2%.Price Performance (One Year)Image Source: Zacks Investment ResearchShould you consider adding PPL to your portfolio only based on positive price movements? Let us delve deeper and find out factors that can help investors decide whether it is a good entry point to add the PPL stock to their portfolios.Factors Acting as Tailwinds for the PPL StockPPL Corporation’s capital investment plan primarily focuses on infrastructure construction projects for generation, transmission and distribution. Customers have been experiencing far fewer outages, courtesy of the ongoing investments in strengthening its infrastructure. PPL is planning to invest $20 billion for the 2025-2028 period to further strengthen its operation and continue providing high-quality services to its customers.Over 60% of PPL’s capital investment plan is subject to “contemporaneous recovery,” which reduces the impact of regulatory lag on earnings for investments. The recovery of capital expenditures quickly allows the company to fund long-term projects easily.PPL continues with its cost savings initiatives and achieved a cumulative annual O&M savings target of $130 million from a 2021 baseline through continued deployment of smart grid technology, automation and data science. The company expects to reduce expenses by at least $175 million by 2026 from the 2021 baseline.PPL’s Pennsylvania and Kentucky service regions continue to attract data centers’ interest. These data centers are creating demand for PPL services and will continue to generate demand for the future, as well as boosting the performance of the company. New data center requests have increased in Pennsylvania and Kentucky to 48 gigawatts (GW) and 6 GW over the 2026-2034 period, respectively.The Pennsylvania and Kentucky service regions registered 1.1% and 1.2% year-over-year increases in electric sales volume in 2024, respectively. The new data center connections will lower transmission costs for retail customers as the load ramps up and attracts more retail customers for PPL services.It is also working on its “Utility of the Future” strategy and initiated an IT transformation effort to move to common systems across the company and developed common design and operations standards across its utilities, including more robust engineering and construction specifications to strengthen and automate the Grid to mitigate increasing weather and storm risks. These measures will increase the resilience of its service and allow the company to serve rising demand from customers efficiently.PPL’s Earnings Estimates Trend UpThe company expects EPS of $1.75-$1.87 for 2025. The Zacks Consensus Estimate for PPL’s 2026 earnings per share indicates increases of 1.02% in the past 90 days. Estimates for 2025 have remained unchanged in the same time frame.Image Source: Zacks Investment ResearchPPL’s Capital Return ProgramThe company has been distributing dividends to its shareholders for a long time and plans to increase dividends annually in the range of 6-8% at least through 2028, subject to the board’s approval. The company recently raised its quarterly dividend rate by 6%, and its current quarterly dividend rate is 27.25 cents, resulting in an annual dividend of $1.09 per share. The current dividend yield is 2.5% better than the S&P 500 group’s yield of 1.56%.PPL has raised dividends for its shareholders five times in the past five years. Check PPL’s dividend history here.PPL Stock Trades at PremiumPPL Corporation is currently valued at a premium compared with its industry on a forward 12-month P/E basis.Image Source: Zacks Investment ResearchAnother utility in the same space, Dominion Energy D, is also trading at a higher premium than the industry.PPL Stock Returns Lower Than the IndustryPPL’s trailing 12-month return on equity of 8.88% is lower than the industry average of 10.87%. Return on equity, a profitability measure, reflects how effectively a company utilizes its shareholders’ funds to generate income.Image Source: Zacks Investment ResearchWrapping UpPPL is set to benefit from rising demand for energy in its service territories, cost savings initiatives will continue to boost margins of the company. Real-time recovery mechanisms of over 60% of capital expenditure without the need for base rate cases allow the company to fund long-term projects easily.The company’s shares are currently trading at a premium, and its returns are a bit lower than the industry. Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolios, while new investors can wait for a better entry point.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant 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 Dominion Energy Inc. (D): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks