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Ameren (AEE) to Gain From Renewables & Infrastructure Upgrade

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We recently issued an updated research report on Ameren Corporation (AEE - Free Report) . The company delivered second-quarter 2018 adjusted earnings of 97 cents per share, surpassing the Zacks Consensus Estimate of 79 cents by 22.8%. Moreover, the bottom line improved 22.8% from the year-ago period’s figure.

Ameren intends to invest nearly $11.4 billion in supporting overall system reliability, environmental compliance and infrastructural upgrades.

What’s Driving the Stock?

In renewables, Ameren has plans to generate electricity through cleaner and more diverse sources of energy including solar, wind, natural gas, hydro and nuclear power. Notably, the company aims at expanding renewable sources, adding at least 700 megawatts (MW) of wind generation by 2020 in Missouri and the neighboring states and further supplementing 100 MW of solar generation over the next 10 years.

These new renewable energy sources will facilitate Ameren Missouri’s compliance with the Missouri state’s requirement of achieving 15% of native load sales from renewable energy sources by 2021, subject to customer rate increase limitations. Moreover, these endeavors will allow Ameren Missouri to realize its goal of reducing 80% CO2 emissions by 2050 from a 2005 base level.

The company aims at investing capital to improve its overall system reliability, environmental compliance and electric plus natural gas utility infrastructure. To this end, during the first half of 2018, the company spent $484 million capital and estimates the overall capex to be $2.2 billion for 2018. Also, over the 2018-2022 period, the company anticipates to incur a capex of $11.4 billion.

Also, a stable financial position enables Ameren to augment shareholder value through payment of regular dividends and share repurchases. Last October, Ameren’s management approved a 4% hike in quarterly cash dividend on its common stock from the prior quarterly tally, thus resulting in an annualized equivalent dividend rate of $1.83. Going forward, Ameren expects its dividend payout ratio to be between 55% and 70% of annual earnings over the next few years.

Estimates for Ameren have been revised upward over the past 30 days. Notably, the Zacks Consensus Estimate for the company’s 2018 and 2019 bottom line has moved 2.6% and 0.3% north to $3.21 and $3.26 per share, respectively. Also, the company’s bottom line exceeded the consensus mark in three of the trailing four quarters with an average beat of 7.69%.

Ameren Corporation Price

Zacks Rank & Other Key Picks

Ameren currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Some other top-ranked stocks from the Zacks Utility – Electric Power Industry are as follows:

NRG Energy, Inc. (NRG - Free Report) sports a Zacks Rank #1. The stock has seen the Zacks Consensus Estimate for 2018 earnings per share move 5.6% north over the past 30 days to $4.14.

Algonquin Power & Utilities Corp. (AQN - Free Report) is a Zacks # 2 Ranked player. The stock has seen the Zacks consensus estimate for current-year earnings being revised 3% upward over the past 30 days to 68 cents per share.

IDACorp, Inc. (IDA - Free Report) carries a Zacks Rank of 2. The stock has seen the Zacks Consensus Estimate for 2018 bottom line per share being raised 1.4% over the past 30 days to $4.28.

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