PPL Corporation (PPL) Leads The Way With Earnings Beat

Shares in PPL Corporation (PPL) were up slightly in aftermarket trading on Thursday. This after the utility company which delivers electricity and natural gas in the United States and the United Kingdom, reported fourth quarter earnings for 2017 of 55 cents per share. This was better than the consensus estimate of 48 cents a share set by analysts. Those were Non-GAAP figures, however on a GAAP basis; PPL actually saw a significant decline from its fortunes from a year ago. GAAP earnings of 11 cents a share was far below the 68 cents a share recorded in the same period in 2016. But the fall-off was not attributable to bad trading or anything like that; what caused it in actual fact was the tax adjustments that had to be made in light of Trumps tax changes. PPL is one of those companies that have seen negative impact from the new tax changes.

In terms of total revenues PPL saw revenues of $1,926M, a figure which beat analyst estimate of $1,855M. There was an overall increase in total revenue of 5.1% measured year over year. Lower sales volume in the company’s European business resulted in a decrease in adjusted earnings to the tune of 27.5% to 29 cents per share. A factor which also contributed to the decrease was foreign exchange fluctuations throughout 2017.

PPL’s business in Kentucky in the US rose 16.7% to 14 cents a share. This was powered by higher gas rates which took effect in the middle of 2017 as well the higher sales volume recorded due to weather conditions. PPL also saw favorable increases for its Pennsylvania Regulated segment of business in the US. The utility company recorded a 27.3% increase to 14 cents a share. This was owed to a reduction in operating expenses and further capital investments.

Cash flows and balance sheet profile also saw a boost with the latest round of earnings announcements. PPL said that as at 31 December 2017, the company had cash and cash equivalents of $485M, a rise from the $341M that was on the books in December 2016. PPL reported net cash flows from operating expenses of $2,461M, down from the $2,890M recorded in 2016.

In providing guidance for 2018, PPL said it expects adjusted earnings to fall between $2.20 and $2.40 per share. PPL also expects compound earnings growth of 5-6% from 2018 through to 2020. The baseline for the p[projected growth is 2017.

In trading on Thursday PPL closed down slightly lower by 1.96% to finishing the day at $29.52. This was after trading high at some points during the day—at one point the stock reached a high of $30.33. Overall PPL is still down on its 52-week high of $40.20.

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