PPL Corporation PPL will release second-quarter 2015 financial results before the market opens on Aug 3. In the previous quarter, this electric utility reported a positive earnings surprise of 13.24%. Let’s see how things are turning out for the first quarter.
Factors at Play
Allentown, PA-based PPL Corporation is streamlining its portfolio through asset monetization and divestitures in order to focus on its core regulated business.
In Jun 2015, the company completed the spin-off of its energy business, PPL Energy Supply, LLC, into an independent entity, Talen Energy Corporation, in collaboration with an energy and power investment firm, Riverstone Holdings LLC. With this spin-off, PPL Corporation has successfully streamlined its business to form a regulated utility company.
Earlier, the company had acquired Louisville Gas and Electric, and Kentucky Utilities, as well as expanded its UK operations. Considering the lower-than-expected performance of the Supply segment, the spin-off removed a considerable overhang on the company, allowing it to concentrate on its regulated operations.
Following the separation, PPL Corporation reaffirmed its 2015 forecast of $2.05 to $2.25 a share for regulated utility earnings.
Again, PPL Corporation, through its subsidiary, PPL Electric, continues to upgrade utility systems to expand operations. During the second quarter, the unit completed the Susquehanna-Roseland transmission line, which is a major upgrade to the nation's electric grid.
However, dependence on nuclear and coal facilities for electricity generation remains a major concern as federal and state governments have become increasingly proactive on curbing carbon emission.
Earnings Whispers
Our proven model does not conclusively show that PPL Corporation is likely to beat earnings 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) for this to happen. That is not the case here as you will see below.
Zacks ESP: The ESP for the stock is currently 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 47 cents.
Zacks Rank: PPL Corporation carries a Zacks Rank #4 (Sell). This rank, when combined with 0.00% ESP, makes an earnings beat unlikely.
As it is, 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:
Consolidated Edison, Inc. ED has an Earnings ESP of +1.56% and a Zacks Rank #3. It will report its quarterly result on Aug 6, 2015.
Entergy Corp. ETR has an Earnings ESP of +1.77% and a Zacks Rank #3. The company is scheduled to report its quarterly result on Aug 4, 2015.
Sempra Energy SRE has an Earnings ESP of +2.11% and a Zacks Rank #3. The company is scheduled to report its quarterly result on Aug 4, 2015.
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