The Allentown, PA-based energy and utility holding company is now down more than 7% in the past week and more than 12% year-to-date.
The stock was the biggest loser among the utilities today, the worst performing sector on the S&P 500 benchmark index. A stronger February jobs report led to speculation that the Fed could raise interest rates as soon as June.
U.S. non-farm payrolls rose by a seasonally adjusted 295,000 jobs in February, the Labor Department said today.
The improving jobs numbers are signaling a better economy, but has those who benefit from low rates worried.
Dividend-paying utilities were one of the key beneficiaries of the low interest rate environment, as investors rotated into the sector in search of income, the Financial Times reports.
Separately, PPL Corp. began trading ex-dividend today. A cash dividend payment of $0.3725 per share is scheduled to be paid on April 1. Shareholders who purchased PPL prior to the ex-dividend date are eligible for the cash dividend payment.
The company delivers electricity and natural gas to the customers and generates electricity from power plants in the northeastern, northwestern and southeastern U.S.
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 revenue growth, compelling growth in net income, good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these 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:
- The revenue growth greatly exceeded the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 42.7%. 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 significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 809.2% when compared to the same quarter one year prior, rising from -$98.00 million to $695.00 million.
- Net operating cash flow has increased to $775.00 million or 22.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -15.53%.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: PPL Ratings Report