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American Electric Power (AEP) Narrows 2016 Guidance

Integrated utility American Electric Power Co., Inc.AEP has narrowed its operating earnings guidance range for 2016 to $3.60-$3.80 per share from the previously stated range of $3.45-$3.85 per share. The company reaffirmed its operating earnings guidance for 2015 in the range of $3.67-$3.77.

Further, American Electric Power has reiterated its capital investment plan of $13 billion spanning over 2016 to 2018, with $5 billion allocated to 2016 and $4 billion each for 2017 and 2018.

The company intends to invest 96% of the projected capital expenditure in its regulated businesses since regulated earnings have grown at an annual compound growth rate of 7.5% since 2012, thereby maximizing shareholder value.

The company has been strategically investing in technology to lower emissions from its power plants. American Electric Power intends to invest a minimum of $5.7 billion in its transmission businesses in the next three years as part of its overall plan of providing cleaner energy and reconstructing aging infrastructure. The aim is to create a grid that is more resilient, reliable and capable of shouldering the needs of the coming generation. These investments will be channeled through AEP Transmission Holding Co. and AEP's regulated utility operating companies. Management anticipates earnings of AEP Transmission Holding Co. to be around 40 cents per share in 2015 and 77 cents per share in 2018.

American Electric Power's third-quarter earnings of $1.06 per share surpassed the Zacks Consensus Estimate of $1.00 by 6%. Earnings also increased 5% from $1.01 per share in the year-ago quarter, supported by continued investments in its regulated businesses.

American Electric Power's strategy of increasing investment in the regulated businesses continues to support its dividend payout plan of 60-70% of its operating earnings. Recently, the company hiked its quarterly dividend rate by 5.7 % to 56 cents per share from 53 cents per share.

Although the company aims to gradually reduce its dependence on coal, it will remain mostly a coal-fired power generator for many years to come. As of Sep, 2015, the AEP System had a total generating capacity of 32,000 MW.

American Electric Power has a stable earnings base of more than 5.4 million customers spread over 11 states.

Earning Releases of Peer Companies

Exelon Corporation EXC reported third-quarter 2015 adjusted operating earnings of 83 cents per share, surpassing both the Zacks Consensus Estimate and year-ago earnings by 17% and 6.4%, respectively.

Diversified energy company FirstEnergy Corp. FE reported third-quarter 2015 operating earnings of 97 cents per share, outpacing the Zacks Consensus Estimate of 86 cents by 12.8%. Earnings also improved 8.9% year over year.

Duke Energy Corporation DUK reported third-quarter 2015 adjusted earnings of $1.47 per share that fell short of the Zacks Consensus Estimate of $1.52 by 3.3%. Quarterly earnings, however, increased 5% year over year owing to warmer weather compared to the previous year

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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