What to Expect When PPL Corp. (PPL) Reports Third-Quarter Earnings Tuesday

NEW YORK (TheStreet) -- Shares of PPL Corp. (PPL) were gaining 0.3% to $35.09 Monday ahead of the electric utility company's earnings report ahead of the market open on Tuesday morning.

Analysts surveyed by Thomson Reuters expect earnings of 53 cents a share and revenue of $2.83 billion for the third quarter. In the third quarter of 2013 PPL reported earnings of 66 cents a share, missing analysts' estimates of 68 cents a share. The company reported revenue of $3.1 billion for the year-ago quarter, missing estimates of $3.3 billion.

In the second quarter of 2014 PPL reported earnings of 53 cents a share on revenue of $2.87 billion, beating analysts' estimates of earnings of 45 cents a share on revenue of $2.78 billion.

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TheStreet Ratings team rates PPL CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PPL CORP (PPL) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 36.85% is the gross profit margin for PPL CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.96% trails the industry average.
  • PPL CORP's earnings per share declined by 46.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PPL CORP reported lower earnings of $1.74 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $1.74).
  • PPL, with its decline in revenue, underperformed when compared the industry average of 5.3%. Since the same quarter one year prior, revenues fell by 17.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Net operating cash flow has declined marginally to $652.00 million or 7.25% when compared to the same quarter last year. Despite a decrease in cash flow of 7.25%, PPL CORP is in line with the industry average cash flow growth rate of -14.71%.
  • You can view the full analysis from the report here: PPL Ratings Report

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