Before the bell,
American Electric Power Company Inc.
) reported its fourth quarter and full year 2012 results. In the
reported quarter, the company clocked operating earnings of 50
cents per share, beating the Zacks Consensus Estimate of 45
cents. The company's results also came above the year-ago
quarterly earnings of 40 cents per share.
On a reported basis the company registered earnings of 5 cents
per share in the reported quarter versus 64 cents per share in
the year-ago period. The variance of 45 cents between the
reported and operating numbers was due to Ohio Plant impairments
charge of 38 cents; restructuring program charge of 4 cents; and
UK Windfall Taxes of 3 cents.
Full year 2012 operating earnings came in at $3.09 per share,
higher than the Zacks Consensus Estimate of $3.04. However this
came below full year 2011 earnings of $3.12 per share. On a
reported basis earnings came in at $2.60 versus $4.02 in full
Quarterly revenue at American Electric Power was $3.6 billion
higher versus both the Zacks Consensus Estimate of $3.5 billion
and the year-ago period number of $3.4 billion.
Full year 2012 revenue was $14.9 billion versus the Zacks
Consensus Estimate of $15.4 billion. Revenue for the reported
full year was also lower than the full year 2011 number of $15.1
In the reported quarter, operating earnings from Utility
Operations increased $108 million year over year to $283 million.
This was due to the favorable impact of successful rate
proceedings and lower spending as a result of cost-containment
efforts. This was partially offset by customer switching in Ohio,
higher storm restoration costs and milder temperatures in
relation to last year.
Operating earnings from Transmission Operations for the
fourth-quarter of 2012 rose $2 million year over year to $13
Operating earnings from AEP River Operations for fourth-quarter
2012 fell $18 million year over year to $4 million. This was
primarily due to the 2012 drought, which had significant impacts
on river conditions and crop yields, resulting in reduced grain
Operating earnings from Generation and Marketing, which includes
American Electric's non-regulated generating, marketing and risk
management activities primarily in the Electric Reliability
Council of Texas (ERCOT) area, increased $9 million to $3 million
in the fourth quarter of 2012.
All Other, which includes the Parent Company and other
investments, decreased $53 million to a loss of $61 million. The
decrease was primarily attributed to costs associated with the
early retirement of parent debt in fourth-quarter 2012.
American Electric Power ended full year 2012 with cash and cash
equivalents of $279 million and other cash deposits of $324
million. At year-end 2011, the company had $221 million in cash
and cash equivalents and $294 million of other cash deposits. The
company generated approximately $3.8 billion of cash from
operating activities in full year 2012 flat versus full year
2011. Long-term debt increased to $15.6 billion at the end of the
reported full year from $15.1 billion at the end of full year
American Electric Power expects 2013 operating earnings in the
range of $3.05 to $3.25 per share.
Columbus, Ohio-based American Electric Power is a public
utility holding company which, through directly and indirectly
owned subsidiaries, generates, transmits, and distributes
electricity, natural gas, and other commodities. The company
derives revenues mainly from power-generating activities.
American Electric Power Company posted strong numbers in the
reported quarter beating both the earnings and revenue estimates.
The beat is commendable as this comes in the face of sluggish
demand growth and the negative impact of customer switching in
Going forward, key growth drivers of the company are stable
regulated operations, growth through transmission network
expansion and an above-average dividend yield. However, tepid
economies in a number of its service states, uncertainty
surrounding pending regulatory cases, its predominantly
fossil-fuel based generation assets, lower wholesale sales and no
catalysts in the near term compel us to remain on the
American Electric Power presently retains a short-term Zacks
Rank #3, which translates into a short-term Hold rating.
Other Stocks to Consider
Other stocks to consider are
) with a Zacks Rank #1 (Strong Buy), and
The AES Corporation
DTE Energy Company
) that carry a Zacks Rank #2 (Buy).
AMEREN CORP (AEE): Free Stock Analysis Report
AMER ELEC PWR (AEP): Free Stock Analysis
AES CORP (AES): Free Stock Analysis Report
DTE ENERGY CO (DTE): Free Stock Analysis
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