PPL Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and PPL (NYSE: PPL  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

PPL suffered from the same trend that held back returns on utilities generally during 2012, but with its feet in some promising projects, PPL may well be able to buck that trend in 2013. Let's take an early look at what's been happening with PPL over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on PPL

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Analyst EPS Estimate	$0.47
Change From Year-Ago EPS	(33%)
Revenue Estimate	$2.47 billion
Change From Year-Ago Revenue	(41%)
Earnings Beats in Past 4 Quarters	4

Source: Yahoo! Finance.

Will PPL generate some excitement this quarter?
Analysts have been reasonably confident about their projections for PPL's fourth quarter, although the consensus earnings-per-share figure has dropped by $0.02. The stock's performance shows few signs of any anxiety, though, with shares up 7% since early November.

Like many utilities, PPL took a big hit from Hurricane Sandy during the quarter. With roughly half a million customers losing power, the storm ranked as the worst outage in PPL's history. In its previous quarterly report, PPL said it expected costs in excess of $60 million, but that it had insurance coverage that would pay for some of those costs and could apply for cost deferral for the remainder.

One area where PPL hopes to build more revenue is in electricity infrastructure. Since mid-2012, PPL has been working alongside General Electric (NYSE: GE  ) to run a pilot project funded by a $40 million federal stimulus grant to bring cheaper and more environmentally friendly power to 60,000 Pennsylvania customers. Yet while PPL expects to spend $3.5 billion on similar initiatives to improve infrastructure, rival Exelon (NYSE: EXC  ) has already committed far more resources toward smart-grid projects and plans to keep spending.

But another thing to remember about PPL is that it also has operations in the U.K. through its ownership interest in subsidiary WPD. Although peer National Grid (NYSE: NGG  ) has a much more substantial presence in the U.K. and gets almost half its sales there, PPL gets about 12% of its revenue from WPD, providing some geographical diversification for the company.

In PPL's coming report, look for signs that exposure to Hurricane Sandy didn't bring any unexpected surprises. With the episode behind it, PPL's latest rate increases could put it in better position to boost profits in the future.

Will Exelon outclass PPL?
Both PPL and Exelon have moved increasingly toward clean energy, but Exelon's recent merger with Constellation puts Exelon on the shortlist of top utilities despite its recent share-price woes. To determine if Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply�click here now�for instant access.

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