American Electric Power Company Inc.
) reported third quarter 2013 operating earnings of $1.10 per
share, beating the Zacks Consensus Estimate of $1.08 by 1.9%. The
quarterly figure also improved 7.8% from the year-ago profit
level of $1.02. This improved performance reflects positive
returns from the investments made in the company's regulated
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On a GAAP basis, the utility earned 89 cents a share versus
earnings of $1.00 in the year-ago period. The difference between
GAAP and operating earnings was due to 21 cents of special items.
The company also hiked its quarterly dividend by 2% to 50 cents
($2.00 per share annualized) from the previous payout 49 cents.
American Electric Power's quarterly revenue was $4.2 billion
million, missing the Zacks Consensus Estimate of $4.6 billion.
The reported number was, however, on par with the year-earlier
Operating earnings increased 6% year over year to $508.0 million.
This was primarily backed by successful rate proceedings and
lower spending resulting from cost-containment initiatives.
These, however, were partly offset by the impacts of higher
competition in Ohio, associated with the decline in capacity
payments in the PJM Interconnection and cooler weather compared
to last year.
Operating earnings experienced a major boost, improving 57.1%
year over year to $22.0 million in the quarter, attributable to
an increase in transmission investment.
AEP River Operations:
This segment registered an operating loss of $1 million, which
came in line with the year-ago figure.
Generation and Marketing:
Operating earnings were $4.0 million, down 60% from $10.0 million
in the third quarter 2012.
The segment's operating earnings were at break-even during the
quarter compared to a loss of $6.0 million in the year-ago
American Electric Power's cash and cash equivalents as of Sep 30,
2013 were $147.0 million versus $279 million as of Dec 31, 2012.
Long-term debt was $16.2 billion as of Sep 30, 2013 versus $15.6
billion as of Dec 31, 2012.
American Electric Power's cash flow from operating activities
during the first nine months of 2013 was $3.0 billion compared
with $2.9 billion in the year-ago comparable period.
American Electric Power, one of the largest electric utilities in
the U.S., raised its lower end of this year's operating earnings
guidance to $3.15 to $3.25 per share from $3.05 to $3.25 per
American Electric Power has a stable earnings base of
approximately 5 million customers spread over 11 states. The
company's cost-control initiatives, particularly overhead cost,
are expected to reap the benefits in the balance of the year
2013. The company had earlier expected its O&M expenses to
remain flat year over year in 2013.
Although energy efficiency continued to adversely impact
residential load growth, commercial demand was higher during the
third quarter. Industrial sales, though challenged, provided a
small margin contribution when compared to residential and
American Electric Power currently has a Zacks Rank #2 (Buy).
Other stocks in the industry that are also worth considering are
Alliant Energy Corp
), all with a comparable Zacks Rank #2 (Buy).