PPL (PPL) ROC %

: 3.79% (As of Dec. 2023)

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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. PPL's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 3.79%.

As of today (2024-04-19), PPL's WACC % is 6.88%. PPL's ROC % is 3.58% (calculated using TTM income statement data). PPL earns returns that do not match up to its cost of capital. It will destroy value as it grows.

PPL ROC % Historical Data

The historical data trend for PPL's ROC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

PPL Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

2.73

2.30

0.13

3.33

3.55

PPL Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %																2.83	4.30	2.57	3.90	3.79

PPL ROC % Calculation

PPL's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	1670 * ( 1 - 19.91% )	/	( (37214	+	38113)	/ 2 )
=	1337.503	/	37663.5
=	3.55 %

where

	Invested Capital		(A: Dec. 2022 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	37837	-	1588	-	( 356	-	max(0, 3789	-	2824	+	356	))
=	37214

	Invested Capital		(A: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	39236	-	1531	-	( 331	-	max(0, 3340	-	2932	+	331	))
=	38113

PPL's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	1600 * ( 1 - 11.02% )	/	( (37074	+	38113)	/ 2 )
=	1423.68	/	37593.5
=	3.79 %

where

	Invested Capital		(Q: Sep. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	38629	-	1680	-	( 353	-	max(0, 2879	-	2754	+	353	))
=	37074

	Invested Capital		(Q: Dec. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	39236	-	1531	-	( 331	-	max(0, 3340	-	2932	+	331	))
=	38113

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

PPL (NYSE:PPL) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, PPL's WACC % is 6.88%. PPL's ROC % is 3.58% (calculated using TTM income statement data). PPL earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

PPL ROC % Related Terms

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PPL (PPL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » PPL Corp (NYSE:PPL) » Definitions » ROC %

Comparable Companies

AEE ES FE ETR CNP CMS DTE WEC AGR EIX NEE SO DUK LSE:NG. AEP PCG D BOM:532555 EXC PEG

Traded in Other Exchanges

PP9:Germany PP9:Germany

Address

Two North Ninth Street, Allentown, PA, USA, 18101-1179

Website

https://www.pplweb.com

PPL is a holding company of regulated utilities in Pennsylvania, Kentucky, and Rhode Island. The Pennsylvania regulated delivery and transmission segment distributes electricity to customers in central and eastern Pennsylvania. LG&E and KU are involved in regulated electricity generation, transmission, and distribution in Kentucky. The Kentucky utilities also serve gas customers. Narragansett operates electric and gas utilities in Rhode Island.

Executives

Tadd J Henninger	officer: Vice President and Treasurer	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Crockett John R Iii	officer: President of a PPL Subsidiary	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
David J Bonenberger	officer: President of a PPL Subsidiary	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Linda G Sullivan	director	P.O.BOX 800, 2244 WALNUT GROVE AVENUE, ROSEMEAD CA 91770
Francis X Sullivan	officer: EVP and COO	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Bergstein Joseph P Jr	officer: VP-IR and Treasurer	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Vincent Sorgi	officer: Vice President and Controller	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Stephanie R Raymond	officer: President of a PPL Subsidiary	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Gregory N Dudkin	officer: President of a PPL Subsidiary	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Angela K Gosman	officer: SVP and CHRO	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Heather B Redman	director	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Wendy E Stark	officer: SVP, GC and Corp Sec	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Joanne H Raphael	officer: SVP, GC & Corp Sec	TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Art P Beattie	director	600 NORTH 18TH STREET, BIRMINGHAM AL 35291
William H Spence	officer: Executive VP and COO	UNIVERSITY OFFICE PLAZA, 252 CHAPMAN RD., PO BOX 6066, NEWARK DE 19714-0066