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Will Ameren Corporation (AEE) Disappoint in Q1 Earnings?

Zacks Equity Research

Ameren Corporation AEE is set to release first-quarter 2017 financial results before the market opens on May 4.

Last quarter, this utility reported a positive earnings surprise of 13.33%. Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

During the fourth-quarter earnings call, Ameren had stated that its quarterly results will reflect a considerably lower-than-expected tax benefits, related to share based compensation, when compared with 2016. On the flip side, management expects the first-quarter earnings to be negatively impacted by regulatory lag related to increase in Missouri depreciation and transmission expenses.

The company also added that in 2017 Ameren Missouri’s electric service earnings are likely to be adversely impacted by the absence of the energy efficiency performance incentive award that was recognized in 2016. We expect this will in turn affect Ameren’s first-quarter financials.

Furthermore, the company's service territories witnessed warmer-than-normal temperatures during the to-be-reported quarter. This is expected to result in lower household expenditure on heating, thereby leading to an unfavorable impact on revenues.

Earnings Whispers

Our proven model does not conclusively show an earnings beat for Ameren this 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. This is not the case here, as you will see below:

Zacks ESP: Ameren’s Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at -2.38%. This is because the Most Accurate estimate stands at 41 cents, while the Zacks Consensus Estimate is pegged a little higher at 42 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ameren carries a Zacks Rank #4 (Sell).

Note that, 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

Ameren Corporation Price and EPS Surprise | Ameren Corporation Quote

Stocks to Consider

Here are a few operators in the electric utility space that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

NiSource, Inc. NI will report first-quarter results on May 3. The company has an Earnings ESP of +6.15% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy Group, Inc. PEGI has an Earnings ESP of +250% and a Zacks Rank #3. The company is expected to report first-quarter results on May 9.

The AES Corporation AES has an Earnings ESP of +15.79% and a Zacks Rank #3. The company is slated to release first-quarter results on May 8.

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Ameren Corporation (AEE): Free Stock Analysis Report
NiSource, Inc (NI): Free Stock Analysis Report
The AES Corporation (AES): Free Stock Analysis Report
Pattern Energy Group Inc. (PEGI): Free Stock Analysis Report
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