Back to top

Image: Bigstock

5 Reasons to Add Ameren (AEE) Stock to Your Portfolio Now

Read MoreHide Full Article

Estimates for Ameren Corporation (AEE - Free Report) have been revised upward over the last 30 days, reflecting analysts’ optimism in the stock post an impressive second-quarter 2018 bottom line performance. Notably, the Zacks Consensus Estimates for the company’s 2018 and 2019 earnings have moved 5.6% and 0.6% up to $3.21 and $3.26 per share, respectively.

The stock currently carries a favorable Zacks Rank #2 (Buy).

Let’s focus on the factors that make Ameren an attractive stock to invest in.

Price Appreciation: Shares of Ameren have returned 7.4% in the past 12 months versus the Utility - Electric Power industry’s decline of 4.3%.



Earnings Result and Surprise Trend: Ameren reported second-quarter 2018 earnings of 97 cents per share from continuing operations, which surpassed the Zacks Consensus Estimate of 79 cents by 22.8%. The company also boasts an impressive earnings surprise history, having pulled off positive earnings surprise in three of the last four quarters.

Strong Capital Expenditure: Ameren continues to invest systematically in growth projects and infrastructure upgrade. It invested $2.1 billion in 2017 and plans to pump in more resources worth $2.2 billion for 2018. As of Jun 30, 2018, the company has incurred nearly $1.1 billion of capex. It expects to spend up to $11.4 billion through 2018-2022. In addition to the proposed long-term investment, the company plans to chip in nearly $1 billion for Ameren Missouri wind generation by 2020.

Regular Dividend: A stable financial position enables Ameren to raise shareholder value via regular dividend payments. During the second quarter, the company paid dividends worth $111 million, compared to $107 million paid in the prior-year quarter.

Looking ahead, Ameren expects a dividend payout ratio between 55% and 70% of annual earnings over the next few years. The company currently has a dividend yield of 2.91%, better than the S&P 500 index’s average of 1.81%.

Focus on Renewables: Ameren plans to offer electricity through cleaner and more diverse sources of energy generation including solar, wind, natural gas, hydro and nuclear power. In this line, the company aims at expanding renewable sources with the addition of minimum 700 megawatts (MW) of wind generation by 2020 in Missouri as well as its neighboring states. Also, plans are afoot to add 100 MW of solar generation over the next 10 years.

Other Stocks to Consider

A few other top-ranked stocks from the same space are Algonquin Power & Utilities Corp. (AQN - Free Report) , CMS Energy Corporation (CMS - Free Report) and DTE Energy Company (DTE - Free Report) , all carrying the same bullish Zacks Rank of 2 as Ameren’s. You can see the complete list of today’s Zacks  #1 Rank (Strong Buy) stocks here.

Algonquin Power & Utilities pulled off a positive earnings surprise of 22.22% in the second quarter. The Zacks Consensus Estimate for 2018 earnings per share (EPS) moved 5 cents north over the past 60 days.

In the second quarter, CMS Energy delivered a positive earnings surprise of 17.07%. The Zacks Consensus Estimate for 2018 EPS has been revised a penny upward over the past 60 days.

DTE Energy came up with an earnings surprise of 22.52% in the second quarter. The Zacks Consensus Estimate for 2018 EPS moved 39 cents up over the past 60 days.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Published in