It has been about a month since the last earnings report for American Electric Power (AEP). Shares have added about 0.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AEP due for a pullback? 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 catalysts.
American Electric Q2 Earnings Beat, Revenues Down Y/Y
American Electric Power Co., Inc. reported second-quarter 2019 adjusted earnings per share (EPS) of $1.00, surpassing the Zacks Consensus Estimate of 98 cents by 2%.
However, the bottom line fell 1% from $1.01 per share in the year-ago quarter.
The company reported GAAP earnings of 93 cents per share compared with the year-ago quarter’s $1.07.
American Electric’s second-quarter revenues of $3.60 billion missed the Zacks Consensus Estimate of $4.15 billion by 13.6%. The reported figure also declined 10.2% from the year-ago quarter’s revenues of $4 billion.
Operating expenses in the reported quarter were $1,861.9 million compared with $1,912.6 million a year ago.
Operating income in the quarter was $585.5 million, down 21% from $741.4 million in the year-ago quarter.
Vertically Integrated Utility Operations: Operating earnings in the quarter decreased to $186.9 million from $276.8 million a year ago.
Transmission & Distribution Utilities: Operating earnings were $131.3 million in the quarter, up from $114 million a year ago.
AEP Transmission Holdco: This segment generated operating income of $154.6 million, up from $101.1 million reported in the second quarter of 2018.
Generation and Marketing: Operating earnings were $27.4 million, up from $26.5 million in the year-ago quarter.
Corporate & Other: Operating losses were $6.6 million compared with operating losses of $20.1 million in the year-ago quarter.
As of Jun 30, 2019, American Electric had cash and cash equivalents of $210.5 million compared with $234.1 million as of Dec 31, 2018.
Long-term debt was $24.17 billion as of Jun 30, 2019, compared with $21.65 billion as of Dec 31, 2018.
Cash flow from operations was $1,800.8 million during the first half of 2019 compared with $2,006.8 million in the first half of 2018.
American Electric has reaffirmed its 2019 operating earnings guidance of $4.00-$4.20 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
At this time, AEP has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AEP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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