Back to top

Analyst Blog

Ameren Missouri, a subsidiary of Ameren Corp. (AEE - Analyst Report), announced that it has priced $350.0 million of 3.50% senior notes due 2024. The notes were issued at a discount of 99.982% of their principal amount. The company added that the offering will close on Apr 4, 2014.

Ameren’s unit intends to utilize the net proceeds from the offering to repay $104 million of 5.50% senior notes due on May 15, 2014, and the outstanding short-term debt.

It is a common practice among companies to refinance its debts. Refinancing will allow Ameren to use the funds in business for a longer period. The new offerings will increase the interest burden of the company by $12.3 million.

In 2013, the company’s free cash flow was $314 million compared with $627 million in 2012, while cash generated from operating activities was $1.69 billion, in line with the year-ago level. The company has repaid $399 million of long-term debt in 2013.

Ameren Corp., a Zacks Rank #2 (Buy) stock, reported strong financial results in the fourth quarter of 2013, surpassing the Zacks Consensus Estimate by 58.3% due to increased rates for Missouri electric and Illinois transmission service.

The company expects earnings per share to grow at a 7% to 10% compound annual rate from 2013 through 2018. Ameren expects positive returns from its infrastructure investments in FERC-regulated transmission and Illinois energy delivery services to boost its top line.

Some better-ranked stocks in the same industry include Otter Tail Corp. (OTTR - Snapshot Report), CPFL Energia S.A.  (CPL - Snapshot Report) and Public Service Enterprise Group Inc. (PEG - Analyst Report), each carrying a Zacks Rank #1 (Strong Buy).