PPL Corporation PPL will release first-quarter 2015 financial results before the market opens on May 7. In the previous quarter, this electric utility reported a positive earnings surprise of 13.73%. Let’s see how things are turning out for the first quarter.
Factors to Note
PPL Corporation generates a substantial portion of electricity from coal-fired facilities. In 2014, competitive power generated from coal-based assets constituted 36.7% of the total power. The company will have to invest intensively to meet regulatory compliance. This would put pressure on its margins.
Though temperatures in February were colder than normal, the first quarter was up against difficult comparisons as the prior-year period was hit by a severe winter given the polar vortex, which drove record demand for natural gas and electricity.
Earnings Whispers?
Our proven model shows that PPL Corporation is not likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.47%. This is because the Most Accurate estimate is pegged at 67 cents while the Zacks Consensus Estimate stands at 68 cents.
Zacks Rank: Though PPL Corp.’s Zacks Rank #3 (Hold) increases the predictive power, the negative ESP makes a positive earnings surprise call unlikely.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Vectren Corp. VVC has an earnings ESP of +4.11% and a Zacks Rank #2.
Consolidated Edison, Inc. ED has an earnings ESP of +1.71% and a Zacks Rank #3.
Cincinnati Bell Inc. CBB has an earnings ESP of +80.0% and a Zacks Rank #3.
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