We have maintained our long-term Neutral recommendation on
) on Aug 30, 2013.
Why the Reiteration?
The St. Louis-based utility provider reported lackluster second
quarter 2013 results with earnings missing our expectation by
10.2%. The quarterly result also plunged 33.3% year over year.
The lower number mainly reflects the result of a planned nuclear
refueling outage, impacts of a regulatory decision in 2012 and a
court decision in 2013, accompanied by a milder weather.
Again, regulated utility earnings also fell considerably during
the quarter in the Missouri segment. Ameren has also slightly
reduced the upper end of its 2013 EPS guidance range for the
charge resulting from the Missouri Court of Appeals verdict. It
now anticipates earnings from continuing operations in the range
of $2.00 to $2.15 per share for 2013 versus its previous
expectation of $2.00 to $2.20.
On the positive, Ameren's decision to exit unregulated generation
and sell its unregulated power generation business, Ameren Energy
Resources Company or AER, to an affiliate of
) will improve the business mix.
We view this divestiture plan as a positive for the company as
the business continues to be affected by low power prices. Ameren
has already locked in some power prices for 2013 and beyond at
even lower prices. Hence, the proposed agreement to exit this
business is prudent.
Following the divestiture, the company will likely see modestly
rising earnings at the core utilities, primarily in Illinois,
over the long term. This is backed by the company's rate base
growth through environmental spending, additions to transmission
lines and basic maintenance and repair of infrastructure.
Stocks to Consider
Ameren currently retains a Zacks Rank #3 (Hold). Stocks worth
considering in the energy space are Zacks Ranked #1 (Strong Buy)
Huaneng Power International, Inc.
) and Zacks Ranked #2 (Buy)
Alliant Energy Corp.
AMEREN CORP (AEE): Free Stock Analysis Report
DYNEGY INC-NEW (DYN): Free Stock Analysis
HUANENG POWER (HNP): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
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