On Jun 25, we issued an updated research report on
). The company continues to invest systematically in infrastructure
development activities and is gradually increasing the capital
In first-quarter 2014, Ameren's capital expenditure was $0.44
billion, up 57.1% from the year-ago figure. The company intends to
invest a total of $8.3 billion on regulated infrastructure between
2014 and 2018, with roughly $1.83 billion allocated for 2014.
Ameren's 2014 spending projection reflects a 32.6% year-over-year
The company is progressing well on its Illinois Rivers Transmission
Project and plans to invest $1.4 billion on its Ameren Illinois
& Ameren Transmission Company of Illinois (ATXI) ventures. The
scheduled completion of these projects will enable Ameren to
provide uninterrupted services to its customers.
Ameren, a Zacks Rank #2 (Buy) stock, reported favorable results in
first-quarter 2014. Both earnings per share and revenues surpassed
the respective Zacks Consensus Estimate and improved year over
year. The outperformance was primarily driven by higher demand for
electricity transmission services due to a severe winter.
Ameren maintained a stable liquidity position, including available
credit of around $1,387 million as well as cash and cash
equivalents of $26 million as of Mar 31, 2014. The company also
maintained a steady cash inflow. In the first three months of 2014,
Ameren's operating cash flow was $239 million. A healthy liquidity
position backed by favorable cash generation capacity provides the
necessary funds for the company's increasing infrastructural
Apart from investing in infrastructure projects, Ameren continues
to focus on maximizing shareholder wealth through the payment of
regular dividends. In first-quarter 2014, the company paid $97
million as dividends.
We are however concerned about the U.S. administration's stringent
regulations on environmental issues. Coal is the primary fuel for
Ameren's mode of power generation. Recently, the Obama
administration rolled out its plan to curb carbon emissions from
power plants by 30% by 2030 from 2005 levels. The rule will
probably come into effect next year. If the proposal is approved as
it is, Ameren will have to invest more to cut pollution from its
power generation facilities. This will likely increase the
company's operating costs.
Key Picks from the Sector
Other stocks worth considering in the utility sector include
Black Hills Corporation
NRG Energy, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
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AMEREN CORP (AEE): Free Stock Analysis Report
DYNEGY INC-NEW (DYN): Free Stock Analysis
BLACK HILLS COR (BKH): Free Stock Analysis
NRG ENERGY INC (NRG): Free Stock Analysis
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