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A month has gone by since the last earnings report for Ameren (AEE). Shares have lost about 1.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Ameren due for a breakout? 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 catalysts.
Ameren Tops Q3 Earnings Estimates, Raises EPS View
Ameren Corporation’s third-quarter 2021 earnings of $1.65 per share from continuing operations exceeded the Zacks Consensus Estimate of $1.62 by 1.9%. Moreover, the reported figure improved 12.2% from $1.47 reported in the year-ago quarter.
The year-over-year bottom-line improvement can be attributed to factors like higher earnings generated from increased infrastructure investments made across all business segments due to a change in seasonal electric rate design at Ameren Missouri and higher electric retail sales driven by a recovering economy. Warmer-than-normal summer temperatures in the third quarter along with a higher allowed return on equity at Ameren Illinois Electric Distribution also boosted quarterly earnings.
Total revenues came in at $1,811 million in the reported quarter, which improved 11.2% year over year due to higher electric as well as natural gas revenues. Revenues also beat the Zacks Consensus Estimate of $1,787 million by 1.3%.
Highlights of the Release
Ameren’s total electricity sales volumes rose 2.3% to 20,474 million kilowatt-hours (kWh) compared with 20,015 million kWh witnessed in the year-ago quarter. However, gas volumes dropped 3.3% to 29 million dekatherms.
Total operating expenses were $1,277 million, up 12.6% year over year.
The company’s interest expenses in the third quarter were $94 million compared with the prior-year quarter’s $110 million.
The Ameren Missouri segment reported earnings of $375 million in third-quarter 2021 compared with $297 million recorded in the prior-year quarter. The year-over-year improvement can be attributed to increased earnings on infrastructure, including wind generation investments, as well as a change in seasonal rate design. Earnings from this segment were also boosted by higher electric retail sales driven by a recovering economy as well as warmer-than-normal summer temperatures.
The Ameren Illinois Electric Distribution segment reported earnings of $36 million for third-quarter 2021 compared with $34 million registered in third-quarter 2020. The year-over-year improvement was driven by increased earnings from infrastructure and energy efficiency investments and a higher allowed return on equity due to a higher projected average 30-year U.S. Treasury bond yield in 2021 compared to 2020.
The Ameren Illinois Natural Gas segment incurred a loss of $8 million for third-quarter 2021 against earnings of $2 million in the prior-year quarter. This year-over-year deterioration was led by a change in rate design.
The Ameren Transmission segment reported earnings of $73 million in third-quarter 2021, compared with $62 million in the prior-year quarter. The improvement can be attributed to higher earnings from infrastructure investment.
Ameren reported cash and cash equivalents of $7 million as of Sep 30, 2021, compared with $139 million registered at 2020-end.
As of Sep 30, 2021, long-term debt totaled $12,444 million compared with $11,078 million as of Dec 31, 2020.
During the first nine months of 2021, cash flow from operating activities amounted to $1,192 million compared with $1,329 million generated in the prior-year period.
Ameren raised its 2021 guidance. The company currently expects to generate earnings per share in the range of $3.75-$3.95, compared with its earlier guidance of $3.65-$3.85. Currently, the Zacks Consensus Estimate for 2021 earnings is pegged at $3.78 per share, lower than the midpoint of the guidance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.75% due to these changes.
Currently, Ameren has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
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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