Assessing PPL (PPL) Valuation After Strong Q3 Earnings Growth and Updated 2025 Guidance

PPL (PPL) recently released its third quarter results, revealing strong year-over-year growth in both revenue and net income. The company also reaffirmed its 2025 earnings guidance and reiterated expected long-term EPS and dividend growth.

See our latest analysis for PPL.

PPL’s upbeat earnings report and renewed guidance have given investors more confidence, helping to fuel its steady momentum. The company has delivered a 14.6% year-to-date share price return and a total shareholder return of 13.7% over the past year. Recent community safety initiatives have kept the company in the public eye, but it is the reliable growth and strong 3- and 5-year total returns that really stand out for long-term holders.

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With shares already rewarding investors this year and fresh guidance backing years of growth ahead, is PPL undervalued at current levels, or is the market already factoring in its next advances?

Most Popular Narrative: 9.2% Undervalued

PPL’s most widely followed valuation narrative sets a fair value that is above the current share price, suggesting room for upside if all goes to plan. With new capital spending plans unfolding and future rate base growth accelerating, much of the current optimism centers around a surge in demand from major infrastructure shifts.

The accelerating growth in data center construction and new economic development (particularly in Pennsylvania and Kentucky) is driving unprecedented electricity demand. This positions PPL for outsized long-term rate base and revenue growth as it invests to serve these large new loads. Major planned grid infrastructure upgrades and generation capacity expansions, totaling $20B through 2028 (with upside from potential data center-driven transmission and new generation projects), set the stage for nearly 10% average annual rate base growth. This directly supports higher regulated revenues and future earnings.

Read the complete narrative.

Want to see the full story behind this price target? The numbers fueling this valuation include bold growth bets and a huge step up in future profitability. Wondering which aggressive forecasts back up this optimistic fair value? Dive in for the full set of projections driving investor expectations.

Result: Fair Value of $40.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, any delays in regulatory approval or overestimated demand from data centers could quickly challenge the optimistic outlook that is currently driving PPL’s valuation narrative.

Find out about the key risks to this PPL narrative.

Another View: Challenging the Upside

While the first approach suggests potential for upside, looking at PPL’s market valuation through its price-to-earnings ratio offers a cautionary perspective. The company trades at 25x earnings, which is noticeably higher than both the US Electric Utilities industry average of 20.9x and the peer average of 15.6x. Even when compared to the fair ratio of 23.1x, what the market could shift toward, PPL still seems pricey. For investors, this premium means there may be less room for error if growth expectations fall short. Could the optimism be running ahead of reality?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own PPL Narrative

If you see the story unfolding differently, or want to dig into the data and craft your own perspective, you can easily build your own view in just a few minutes with Do it your way.

A great starting point for your PPL research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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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