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Why Is Ameren (AEE) Down 2.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for Ameren (AEE - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ameren due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ameren Q2 Earnings Top Estimates, Revenues Rise Y/Y

Ameren Corporation’s second-quarter 2020 earnings of 98 cents per share from continuing operations beat the Zacks Consensus Estimate of 95 cents by 3.2%. The bottom line also improved 36.1% from the year-ago quarter’s 72 cents.

Total Revenues

Total revenues came in at $1,398 million in the reported quarter, increasing 1.4% year over year driven by higher electric sales volumes. The top line however lagged the Zacks Consensus Estimate of $1,479 million by 5.5%.

Ameren’s total electricity sales volume increased 3.8% to 16,967 million kilowatt hours (kWh) compared with 16,339 million kWh in the year-ago quarter. However, gas volumes remained flat at 161 million dekatherms.

Total operating expenses were $1,044 million, down 5% year over year. Interest expenses were $108 million compared with $97 million a year ago.

The company’s operating income increased 26.4% to $354 million from $280 million in the year-ago quarter.

Segment Results

Ameren Missouri segment reported operating earnings of $152 million for the second quarter compared with $107 million in the year-ago quarter. The upside can be attributed to lower operations and maintenance expenses as well as disciplined cost management and changes in the cash surrender value of company-owned life insurance driven by favorable market returns. Also, new electric service rates and the positive impact on electric sales from near-normal temperatures boosted earnings.

Ameren Illinois Electric Distribution segment reported operating income of $36 million compared with $37 million in the year-ago quarter, owing to a lower allowed return on equity.

Ameren Illinois Natural Gas segment reported operating income of $9 million compared with $1 million in the year-ago quarter. The upside was driven by increased earnings on infrastructure investments and lower other operations and maintenance expenses.

Ameren Transmission segment reported operating income of $59 million in the second quarter compared with $42 million in the year-ago quarter, led by increased earnings on infrastructure investments and lower other operations and maintenance expenses.

Financial Condition

The company reported cash and cash equivalents of $8 million as of Jun 30, 2020, compared with $16 million at 2019-end.

As of Jun 30, 2020, long-term debt totaled $10,171 million compared with $8,915 million as of Dec 31, 2019.

At the end of second-quarter 2020, cash from operating activities amounted to $694 million compared with $879 million at the second quarter of 2019 end.

Guidance

Ameren reaffirmed its 2020 guidance. The company still expects earnings of $3.40-$3.60 per share, which is projected to grow at a 6-8% compound annual rate from 2020 through 2024. Currently, the Zacks Consensus Estimate for the company’s 2020 earnings is pegged at $3.46 per share, lower than the midpoint of its guided range.

How Have Estimates Been Moving Since Then?

Estimates review followed a flat path over the past two months.

VGM Scores

At this time, Ameren has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Ameren has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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