The Bull Case For PPL (PPL) Could Change Following Storm Outages And Contested Grid Rate Hike

• Recent high winds across Pennsylvania caused widespread storm-related damage and power outages for tens of thousands of PPL customers, with crews working to restore service and rebuild key transmission lines to improve reliability.
• At the same time, PPL’s request for a US$356.00 million annual base-rate increase to fund grid resilience upgrades has drawn strong public and political pushback, highlighting tension between reliability investment needs and customer affordability concerns.
• We’ll now examine how these storm-driven outages and the contested rate hike could influence PPL’s long-term grid investment and earnings narrative.

Find companies with promising cash flow potential yet trading below their fair value.

PPL Investment Narrative Recap

To own PPL, you need to believe that a regulated utility can steadily grow earnings and its rate base by investing heavily in reliability while keeping regulators and customers onside. The December windstorms and outages reinforce the case for grid hardening, but the immediate financial impact appears limited; the more important short term catalyst remains the outcome of PPL’s current Pennsylvania rate case, with the biggest near term risk being tougher regulatory scrutiny on how much of its US$20.0 billion capital plan can be recovered in rates.

The US$356.0 million annual base rate increase request in Pennsylvania sits at the heart of this tension. Public and political resistance to higher bills directly intersects with PPL’s plan for substantial grid and generation investments through 2028, so how regulators balance resilience spending against affordability in this case will be an important signal for future earnings growth and for the pace of upcoming grid projects.

Yet investors should be aware that if regulators curb rate recovery or impose stricter conditions on new grid spending...

Read the full narrative on PPL (it's free!)

PPL's narrative projects $9.6 billion revenue and $1.7 billion earnings by 2028. This requires 2.8% yearly revenue growth and about a $714 million earnings increase from $986.0 million today.

Uncover how PPL's forecasts yield a $39.87 fair value, a 16% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members currently bracket PPL’s fair value between about US$27.31 and US$39.87, based on two independent estimates. Against that wide range of views, the central issue remains whether regulators will consistently approve the sizable grid investment program PPL is pursuing, which could materially shape long term earnings resilience and risk.

Explore 2 other fair value estimates on PPL - why the stock might be worth as much as 16% more than the current price!

Build Your Own PPL Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your PPL research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free PPL research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate PPL's overall financial health at a glance.

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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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