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Ameren (AEE) to Report Q2 Earnings: What's in the Cards?

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Ameren Corporation (AEE - Free Report) is scheduled to release second-quarter 2019 results on Aug 2, before the opening bell. In the last reported quarter, this utility delivered a positive earnings surprise of 11.43%.

Moreover, the company’s earnings outpaced estimates in three of the trailing four quarters, the average beat being 9.73%.
 
Let’s see how things are shaping up prior to this announcement.

Factors at Play

Ameren’s service territories witnessed severe weather conditions during most of the second quarter of 2019, characterized by severe storms, tornadoes and excessive flooding. Particularly, in Illinois, inclement weather damaged more than 230 transmission and distribution structures and poles along a wide band stretching more than 200 miles across. Cumulatively, this may have caused electricity outages, thereby disrupting smooth supply of power.

As a result, temperature is likely to hurt Ameren’s revenues in the to-be-reported quarter. In line with this, the Zacks Consensus Estimate for the company’s second-quarter revenues, pegged at $1.43 billion, indicates a decline of 8.4% from the year-ago reported figure.

On first-quarter earnings call, the company announced in anticipation that the Callaway refueling and maintenance outage in Spring 2019 might affect Ameren Missouri’s earnings in the second quarter. In fact, the company projected its second-quarter earnings to be dented by approximately 30 cents per share year over year due to the outage and the impact of a rough weather.

Moreover, the company expected the first-quarter timing differences related to income tax expense in Ameren Missouri and Ameren Parent to induce quarterly variations, which may hit its bottom line in the soon-to-reported quarter.

Considering these unfavorable forecasts, the Zacks Consensus Estimate for Ameren’s earnings in the second quarter is pegged at 75 cents, suggesting a 22.7% decline from the year-ago quarter’s reported figure.

During the quarter, Ameren Missouri entered into an agreement with Tradewind Energy to acquire a third wind generation facility in Missouri, after construction. We expect to get further updates on this agreement once the upcoming quarterly results are out.

Earnings Whispers
 
Our proven model does not conclusively show that Ameren is likely to beat on earnings in the second quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here as you will see below.
 
Earnings ESP: Ameren has an Earnings ESP of -1.86%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, its negative ESP in the combination leaves surprise prediction inconclusive for the stock this earnings season.

You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Ameren Corporation Price and EPS Surprise

Stocks to Consider

Here are a few players from the Utilities sector that have the right combination of elements to beat on earnings beat this reporting cycle.

PPL Corporation (PPL - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank of 3. The company is expected to release second-quarter results on Aug 6.

Black Hills Corporation (BKH - Free Report) is scheduled to release second-quarter results on Aug 5. It has an Earnings ESP of +0.75% and a Zacks Rank #3.

Pinnacle West Capital Corporation (PNW - Free Report) is scheduled to release second-quarter results on Aug 8. It has an Earnings ESP of +0.06% and is Zacks #3 Ranked.

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