PPL (PPL) Grid Plan Raises The Question Of Whether The Stock Is Still Undervalued
PPL (PPL) is drawing investor attention after outlining a planned US$23 billion investment program through 2029, supported by disciplined cost management and closely tied to its current earnings guidance.
See our latest analysis for PPL.
Despite the fresh US$23 billion investment plan and grid upgrade story, PPL's recent momentum has softened, with the share price down over the past quarter. However, the 3 year total shareholder return of 40.04% and 5 year total shareholder return of 47.30% reflect a stronger longer term record.
If this kind of grid investment theme interests you, it may be worth broadening your watchlist with 35 power grid technology and infrastructure stocks
After a softer recent share price patch, despite PPL outlining a US$23 billion grid plan and sitting below analyst price targets, is more of the potential already reflected in the stock, or does valuation still leave room ahead?
Most Popular Narrative: 14.1% Undervalued
PPL's most followed narrative sets a fair value of $41.20 per share, above the last close of $35.41, and ties that gap directly to its long-term capital plan.
The accelerating growth in data center construction and new economic development (particularly in Pennsylvania and Kentucky) is driving unprecedented electricity demand, positioning PPL for outsized long-term rate base and revenue growth as it invests to serve these large new loads.
Curious what is baked into that $41.20 figure? The narrative highlights steady grid spending, firmer margins, and a future earnings multiple that requires careful scrutiny.
Result: Fair Value of $41.20 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, PPL's concentration in a few U.S. regulatory jurisdictions and its reliance on large data center loads mean that shifts in policy or demand could quickly challenge this undervaluation story.
Find out about the key risks to this PPL narrative.
Another View: SWS DCF Model Paints A Harsher Picture For PPL
While the most popular PPL narrative points to a fair value of $41.20 and labels the stock as 14.1% undervalued, the SWS DCF model points the other way with an estimate of $19.97 per share. This makes the current $35.41 price look expensive and raises the question of which story you trust more.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PPL for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 50 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With mixed signals around PPL's valuation, it helps to move quickly from headlines to the underlying data and form your own stance. To weigh both the risks investors are worried about and the rewards they are optimistic about, start by reviewing the 4 key rewards and 2 important warning signs.
Looking for more ideas beyond PPL?
If PPL has sharpened your interest in utilities and infrastructure, do not stop here. The broader market holds other compelling setups that could round out your watchlist.
- Target potential upside in quality companies trading below their estimated worth by checking out the 50 high quality undervalued stocks.
- Build a steadier income stream by reviewing the 9 dividend fortresses with an emphasis on resilient, higher yielding payers.
- Prioritise capital preservation by scanning the 81 resilient stocks with low risk scores that focuses on businesses with lower risk profiles.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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