Back to top

Is a Beat in the Cards for Ameren (AEE) in Q2 Earnings?

Read MoreHide Full Article

Ameren Corporation (AEE - Free Report) is scheduled to release second-quarter 2018 results before the opening bell on Aug 3, 2018. Last reported quarter, the utility delivered a positive earnings surprise of 6.90%.

The company’s bottom line also surpassed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 7.69%.

Let’s see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Ameren is likely to beat on earnings in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen and Ameren precisely has the right mix of both elements.

Earnings ESP: Ameren has an Earnings ESP of +1.69%. A positive ESP increases the odds of a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ameren currently has a Zacks Rank #2, which increases the predictive power of ESP. Therefore, the company’s bullish Zacks Rank combined with a solid ESP value makes us significantly confident about an earnings beat this reporting cycle.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Ameren Corporation Price and EPS Surprise

Factors at Play

The Zacks Consensus Estimate for second-quarter 2018 earnings is pegged at 79 cents per share, in line with the year-ago reported quarter’s tally.

Ameren expects second-quarter earnings to gain from an increase in Missouri electric service rates plus transmission and electric distribution infrastructure investments. In addition, refinancing of debts at favorable terms should lower the company’s interest expenses, which in turn, is also likely to aid its earnings growth.

However, on the first-quarter earnings call, management announced that return to normal temperature might adversely impact the company’s bottom line by a penny per share. Also, other operation and maintenance expenses at Ameren Missouri coupled with increased depreciation expenses are likely to affect earnings compared with second-quarter 2017.

Nevertheless, Ameren’s majority service territories experienced colder-than-normal temperature at the onset of the second quarter while warmer-than-normal temperature prevailed in the end. So, overall climate remained favorable across the company’s service territories, which should boost electric demand and Ameren’s revenues in turn this yet-to-be-reported quarter.

Other Stocks to Consider

Investors can also check out some other companies worth considering from the Utility sector with the perfect ingredients to beat estimates this time around:

CenterPoint Energy, Inc. (CNP - Free Report) will report second-quarter 2018 results on Aug 3. The company has an Earnings ESP of +0.93% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AquaVenture Holdings Ltd. (WAAS - Free Report) has an Earnings ESP of +10.00% and is a Zacks #2 Ranked player. The company is scheduled to report second-quarter 2018 results on Aug 8.

Southwest Gas Corporation (SWX - Free Report) has an Earnings ESP of +4.84% and is a #2 Ranked stock. The company is expected to report second-quarter 2018 numbers on Aug 6.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like