PPL Corp (PPL): Assessing Valuation After Data Center Momentum, Kentucky Regulatory Progress, and Earnings Optimism

If you have been keeping an eye on PPL (PPL) lately, you probably noticed some chatter surrounding its data center projects and regulatory milestones. The company has recently attracted renewed attention after analysts highlighted not only upcoming opportunities in data centers but also a wave of positive movement on legislative and regulatory matters, especially in Kentucky. Add in an approaching earnings report with strong year-over-year growth projections, and it is no wonder investors are pausing to consider their next move with PPL stock.

PPL’s shares have been outpacing the S&P 500, with a recent close at $36.72. Momentum is building as the stock has delivered a return of 15% over the past year and maintains a healthy 61% gain over the past three years. Investor optimism seems to be buoyed by steady forecasts and hints of long-term growth potential. Regulatory headwinds have begun to ease, at least in some regions, which adds another layer of intrigue as markets process the risks and rewards.

Now the big question is this: after this kind of run and favorable headlines, is PPL a bargain with future upside, or has the market already priced in the next phase of growth?

Most Popular Narrative: 4.1% Undervalued

The prevailing narrative suggests that PPL shares are currently undervalued by just over 4%, with steady growth prospects fueling this outlook despite some uncertainties around regulatory risk and capital allocation.

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. The company's new joint venture with Blackstone Infrastructure, targeting contracted, "regulated-like" generation for hyperscalers, provides a significant new avenue for capital deployment and value creation not yet fully captured in consensus. There is potential to drive long-term earnings above base guidance as these projects come online.

Curious about the engine driving this bullish narrative? The story hides the ingredients behind why PPL’s perceived value has climbed, including ambitions tied to revenue growth, profitability, and future investment payoffs. Want to uncover which strategic moves and bold forecasts are quietly setting the stage for the current valuation? Dive in to see how this vision shakes out in the core numbers and what really underpins that attractive upside.

Result: Fair Value of $38.31 (UNDERVALUED)

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

However, uncertainty remains, particularly if regulatory decisions are unfavorable or if data center demand does not grow as anticipated.

Find out about the key risks to this PPL narrative.

Another View: By the Numbers

While the previous narrative points to upside, our SWS DCF model delivers a differing signal using discounted future cash flows. This approach now suggests PPL may actually be priced below its estimated value. Could the market be overlooking something, or is optimism justified?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding PPL to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own PPL Narrative

If you prefer drawing your own conclusions or want to dig deeper than the current outlook, you can craft a personalized view with just a few clicks. 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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