PPL Corporation Touches 52-Week High - Analyst Blog

On May 28, 2014, the shares of PPL Corporation PPL climbed to a 52-week high of $34.66. The share price finally closed at $34.64, up 0.9% from the previous day's closing. We believe that the company's strong liquidity position, efficient cash generation capacity, disciplined investment in various projects, strategic asset divestment and payment of dividends at regular intervals have boosted the share price. These positives are expected to drive PPL Corp.'s future performance as well.

PPL Corp. maintains a stable liquidity position and cash generation capability. As of Mar 31, 2014, the company's cash and cash equivalents were $1.26 billion versus $1.1 billion as of Dec 31, 2013. In the first three months of 2014, cash flow from operating activities jumped substantially to $0.93 billion from $0.24 billion in the year-ago comparable period.

A strong financial position supports PPL Corp.'s capital requirement for infrastructure ventures. In the first quarter, the company invested around $0.9 billion on property, plant and equipment. The company's Susquehanna-Roseland transmission line project is progressing well. It has energized a new 230-kilovolt section of the line through the Delaware water gap. PPL Corp. plans to invest $4.11 billion in 2014. Steady investment in transmission and distribution assets will ensure uninterrupted services to its customers.

Apart from investing in different ventures, PPL Corp. also follows an asset divestment strategy. The company's unit in Montana plans to sell 633 megawatt of hydroelectric generating assets. If approved, PPL Corp. can utilize the proceeds for other profitable projects.

In addition to capital investments, PPL Corp. also has a regular dividend payment policy, which enables it to maximize shareholder wealth. In the first quarter of 2014, the company paid $234 million as dividends. This initiative will enable PPL Corp. to retain investor attention in the stock.

PPL Corp. currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the utilities industry include NRG Energy, Inc. NRG, Alliant Energy Corporation LNT and American Electric Power Company, Inc. AEP. While NRG Energy holds a Zacks Rank #1 (Strong Buy), Alliant Energy and American Electric Power carry a Zacks Rank #2 (Buy).