PPL CorporationPPL

Morningstar Rating

Stock Research and Analysis

by Travis Miller

PPL, founded in 1920 as Pennsylvania Power & Light, is one of the oldest and largest regional power companies in the United States, with vertically integrated operations that stretch from Montana to the United Kingdom. This diversification yields Read more

Bulls Say

Cash flow from operations has doubled since 2002, while assets have grown only 29%.

Most of the $500 million of free cash flow PPL generates in a normal operating environment should go back to shareholders through buybacks and dividends.

Both the U.S. and the U.K. have embarked on nationwide initiatives to expand transmission capacity, which should support growth for PPL's regulated utility.

The company's dividend has increased at an 11% annual rate since 2004. Read more

Bears Say

PPL's power plant efficiency ranks below the average of other power plants in the Midwest region, which has created a drag on earnings.

Slow population growth in its regulated service areas in Pennsylvania, southwest England, and Wales could stunt earnings growth.

Most of PPL's power supply is hedged through 2011, taking away any potential upside if power prices turn around quickly.

Net margins at the Pennsylvania utility have been between 3% and 5% in the past three years. Read more

Strategy

Following its exit from Latin America, management has nearly completed its back-to-basics strategy. The company now has more capital flexibility than in years past to invest in new power plants and regulated Read more

Management

James Miller assumed the CEO, president, and chairman roles in October 2006 from William Hecht, who retired after 42 years with the company and 13 as CEO. Miller had been COO for three years beforehand. Paul Farr assumed the CFO duties in April 2007 Read more

Profile

PPL is an integrated energy holding firm with four segments. PPL Generation manages 12,200 megawatts of generating capacity, including 7,400 megawatts (61%) of low-cost Read more

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