PPL Corporation (PPL) — This energy and utility holding company provides electricity for wholesale and retail customers in Pennsylvania, Kentucky, Virginia, Tennessee and the United Kingdom.
Shares rose 4.2% Thursday after the company reported third-quarter revenue and earnings that beat consensus expectations. Sales of $3.45 billion represented a 12% year-over-year increase and exceeded the Zacks consensus estimate by 20%. The bottom line decreased by 18%, although EPS of $0.54 also beat the Zacks estimate of $0.52.
While earnings did fall short of S&P Capital IQ’s projection of $0.58, its analysts maintained their “buy” recommendation and $38 price target. They said they see capital spending driving near-term rate base growth of 6.7% a year.
Management upped its 2014 earnings guidance to $2.37 to $2.47 per share from a previous $2.20 to $2.40. They said this was based on strong performance in the company’s regulated businesses and competitive energy supply business.
Technically, PPL stock broke from a bull channel commonly called an upward flag. This followed a buy signal from my proprietary internal indicator, the Collins-Bollinger Reversal (CBR), in early October, and a buy signal from the Williams %R, as well as a very strong momentum indicator.
Shares have been rising on increasing volume and closed Thursday at a new high. All trends and internal indicators are positive, but MACD is overbought.
Despite the positive outlook and 4.1% dividend yield, chasing the shares may prove to be a mistake since spikes like Thursday’s are often followed by profit taking. Buy PPL stock under $35 for a trade to $40.
