A month has gone by since the last earnings report for American Electric Power (AEP). Shares have added about 4.1% 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 its most recent earnings report in order to get a better handle on the important drivers.
American Electric Q1 Earnings Beat, Sales Decline Y/Y
American Electric Power Co., Inc. reported first-quarter 2019 adjusted earnings per share (EPS) of $1.19, surpassing the Zacks Consensus Estimate of $1.10 by 8.2%.
However, the bottom line rose 24% from 96 cents per share in the year-ago quarter.
The company reported GAAP earnings of $1.16 per share compared with the year-ago quarter’s 92 cents.
American Electric’s first-quarter revenues of $4.06 billion missed the Zacks Consensus Estimate of $4.31 billion by 5.76%. The reported figure also declined 0.3% from the year-ago quarter’s revenues of $4.07 billion.
Operating expenses in the reported quarter were $1,844.3 million compared with $1,850.2 million a year ago.
Operating income in the quarter was $804.2 million, up 10.2% from $729.8 million in the year-ago quarter.
Vertically Integrated Utility Operations: Operating earnings in the quarter increased to $310.8 million from $231.2 million a year ago.
Transmission & Distribution Utilities: Operating earnings were $156.6 million in the quarter, up from $125.4 million a year ago.
AEP Transmission Holdco: This segment generated operating income of $124.2 million, up from $104 million reported in the first quarter of 2018.
Generation and Marketing: Operating earnings were $43.1 million, up from $37 million in the year-ago quarter.
Corporate & Other: Operating losses were $49.9 million compared with operating losses of $24.4 million registered in the year-ago quarter.
As of Mar 31, 2019, American Electric had cash and cash equivalents of $227.7 million compared with $234.1 million as of Dec 31, 2018.
Long-term debt was $22.90 billion as of Mar 31, 2019, compared with $21.65 billion as of Dec 31, 2018.
Cash flow from operations was $808.3 million in the first three months of 2019 compared with $802.2 million in the prior- year period.
American Electric has reaffirmed its 2019 operating earnings guidance of $4.00-$4.20.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
Currently, AEP has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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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