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Why Is Ameren (AEE) Up 0.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Ameren (AEE - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.

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

Ameren Q2 Earnings Miss Estimates, Revenues Down Y/Y

Ameren Corporation’s second-quarter 2019 earnings of 72 cents per share from continuing operations missed the Zacks Consensus Estimate of 75 cents by 4%. The bottom line also declined 25.8% from the year-ago quarter’s 97 cents.

Total Revenues

Total revenues came in at $1,379 million in the reported quarter, which declined 11.8% year over year owing to lower electric and natural gas sales volumes. The reported figure also missed the Zacks Consensus Estimate of $1,432 million by 3.7%.

Highlights of the Release

Ameren’s total electricity sales volumes declined 16.2% to 16,339 million kilowatt hours (kWh) compared with 19,494 million kWh in the year-ago quarter. However, gas volumes expanded 6.5% to 82 million dekatherms.

Total operating expenses summed $1,099 million, down 6.7% year over year from $1,178 million. Interest expenses were $97 million compared with $100 million a year ago.

The company’s operating income declined 27% to $280 million from $385 million in the year-ago quarter.

Segment Results

The Ameren Missouri segment reported operating income of $107 million in the second quarter compared with $168 million in the year-ago quarter. The year-over-year decline reflected lower electric retail sales, which negatively impacted earnings by approximately $53 million primarily due to mild early-summer temperatures compared to extremely warm early-summer temperatures in the year-ago period.

The Ameren Illinois Electric Distribution segment reported operating income of $37 million in the second quarter compared with $33 million in the year-ago quarter. The year-over-year improvement reflected increased earnings on infrastructure investments

The Ameren Illinois Natural Gas segment reported operating income of $1 million compared with $7 million in the year-ago quarter. The year-over-year decline was primarily due to a change in rate design, which is not expected to impact full-year results.

The Ameren Transmission segment reported operating income of $42 million in the second quarter compared with $36 million in the year-ago quarter. The year-over-year improvement reflected increased earnings on infrastructure investments.

Financial Condition

The company reported cash and cash equivalents of $6 million as on Jun 30, 2019, compared with $16 million at 2018 end.

As of Jun 30, 2019, long-term debt totaled $8,222 million compared with $7,859 million as on Dec 31, 2018.

In the first half of 2019, cash from operating activities amounted to $879 million compared with $820 generated in the first half of 2018.

Guidance

Ameren reaffirms its 2019 guidance. The company expects earnings of $3.15-$3.35 per share, which is projected to grow at a 6-8% compound annual rate from 2018 through 2023. Currently, the Zacks Consensus Estimate for the company’s 2019 earnings is pegged at $3.26, which lies above the mid-point of the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Ameren has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, 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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