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American Electric Power (AEP) Up 4% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for American Electric Power Company, Inc. (AEP - Free Report) . Shares have added about 4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
American Electric Misses on Q3 Earnings, Narrows View
American Electric Power reported third-quarter 2017 operating earnings per share (EPS) of $1.10, missing the Zacks Consensus Estimate of $1.19 by 7.6%.
The bottom line also declined 15.4% from $1.30 reported a year ago.
Total Revenues
American Electric’s third-quarter revenues of $4.1 billion fell 12.8% from $4.7 billion in the year-ago quarter. The reported figure also missed the Zacks Consensus Estimate of $4.2 billion.
Quarterly Highlights
Operating expenses in the reported quarter were $1,695.2 million compared with $1,861.1 million a year ago.
Operating income in the quarter was $984.1 million, down 13.7% from $1,140.3 million a year ago.
Segmental Performance
Vertically Integrated Utility Operations: Operating earnings in the quarter declined to $286.3 million from $349.1 million a year ago.
Transmission & Distribution Utilities: Operating earnings were $144 million in the quarter, down from $155.7 million a year ago.
AEP Transmission Holdco: This segment generated an operating income of $75.5 million, up from $69 million recorded in the third quarter of 2016.
Generation and Marketing: Operating earnings were $32.1 million, down from $81 million in the year-ago quarter.
Corporate & Other: Operating earnings were $5.2 million, as against loss of $15.1 million in the year-ago quarter.
Financial Update
As of Sep 30, 2017 American Electric had $343.9 million in cash and cash equivalents compared with $210.5 million as of Dec 31, 2016.
Long-term debt was $18.36 billion as of Sep 30, 2017 compared with $20.26 billion as of Dec 31, 2016.
Cash flow from operations was $3,124.2 million in the first nine months of 2017 compared with $3,421 million in the prior-year period.
Guidance
American Electric has narrowed its 2017 operating earnings guidance in the range of $3.55–$3.68 from the prior guidance of $3.55-$3.75.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There have been four moves higher in the last two months. In the past month, the consensus estimate has shifted by 8.5% due to these changes.
VGM Scores
Currently, American Electric Power's stock has a subpar Growth Score of D, a grade with the same score on the momentum front. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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American Electric Power (AEP) Up 4% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for American Electric Power Company, Inc. (AEP - Free Report) . Shares have added about 4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
American Electric Misses on Q3 Earnings, Narrows View
American Electric Power reported third-quarter 2017 operating earnings per share (EPS) of $1.10, missing the Zacks Consensus Estimate of $1.19 by 7.6%.
The bottom line also declined 15.4% from $1.30 reported a year ago.
Total Revenues
American Electric’s third-quarter revenues of $4.1 billion fell 12.8% from $4.7 billion in the year-ago quarter. The reported figure also missed the Zacks Consensus Estimate of $4.2 billion.
Quarterly Highlights
Operating expenses in the reported quarter were $1,695.2 million compared with $1,861.1 million a year ago.
Operating income in the quarter was $984.1 million, down 13.7% from $1,140.3 million a year ago.
Segmental Performance
Vertically Integrated Utility Operations: Operating earnings in the quarter declined to $286.3 million from $349.1 million a year ago.
Transmission & Distribution Utilities: Operating earnings were $144 million in the quarter, down from $155.7 million a year ago.
AEP Transmission Holdco: This segment generated an operating income of $75.5 million, up from $69 million recorded in the third quarter of 2016.
Generation and Marketing: Operating earnings were $32.1 million, down from $81 million in the year-ago quarter.
Corporate & Other: Operating earnings were $5.2 million, as against loss of $15.1 million in the year-ago quarter.
Financial Update
As of Sep 30, 2017 American Electric had $343.9 million in cash and cash equivalents compared with $210.5 million as of Dec 31, 2016.
Long-term debt was $18.36 billion as of Sep 30, 2017 compared with $20.26 billion as of Dec 31, 2016.
Cash flow from operations was $3,124.2 million in the first nine months of 2017 compared with $3,421 million in the prior-year period.
Guidance
American Electric has narrowed its 2017 operating earnings guidance in the range of $3.55–$3.68 from the prior guidance of $3.55-$3.75.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There have been four moves higher in the last two months. In the past month, the consensus estimate has shifted by 8.5% due to these changes.
VGM Scores
Currently, American Electric Power's stock has a subpar Growth Score of D, a grade with the same score on the momentum front. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.