NEW YORK (TheStreet) -- Shares of PPL Corp. (PPL) - Get Free Report were falling 8.5% to $31.82 on Tuesday, a day after the electric utility company completed the spinoff of its competitive supply business.
The spinoff power company, called Talen Energy, also includes generation assets owned RiverstoneHoldings.
PPL said the spinoff completed its transition to focus solely on "high-performing regulated utilities in both the United States and the United Kingdom." The transition included the acquisition of Louisville Gas and Electric and Kentucky Utilities and the expansion of its U.K. operations.
"Over the past five years, we've transformed PPL into one of the top 10 utility companies in the U.S., and reshaped it in ways that have preserved and grown value for our shareowners," Chairman, President, and CEO of PPL William H. Spence said.
Following the spinoff PPL reaffirmed its 2015 forecast of $2.05 to $2.25 a share for regulated utility earnings. Analysts expect the company to report earnings of $2.26 a share for the year.
TheStreet Ratings team rates PPL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PPL CORP (PPL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, notable return on equity, expanding profit margins and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PPL's very impressive revenue growth greatly exceeded the industry average of 2.9%. Since the same quarter one year prior, revenues leaped by 151.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Electric Utilities industry average. The net income increased by 104.7% when compared to the same quarter one year prior, rising from $316.00 million to $647.00 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, PPL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- 43.00% is the gross profit margin for PPL CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, PPL's net profit margin of 20.44% compares favorably to the industry average.
- PPL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PPL CORP increased its bottom line by earning $2.39 versus $1.69 in the prior year. For the next year, the market is expecting a contraction of 6.3% in earnings ($2.24 versus $2.39).
- You can view the full analysis from the report here: PPL Ratings Report