Markets

What's in Store for Ameren (AEE) this Earnings Season?

Ameren CorporationAEE will release fourth-quarter 2015 financial results before the market opens on Feb 19. In the previous quarter, the utility had reported a positive earnings surprise of 7.63%. Let's see how things are turning out for the fourth quarter.

Factors at Play

Ameren expects to earn higher profits in the fourth quarter, as revealed during the third quarter earnings call. In the fourth quarter of 2014, the utility had a Callaway Energy Center refueling and maintenance outage. Hence, the absence of the Callaway refueling outage this year will likely boost fourth quarter 2015 earnings by approximately 8 cents per share compared with the year-ago period.

Ameren also expects higher profits from its FERC-regulated electric transmission and Illinois electric delivery services on the back of considerable infrastructure investment under formula ratemaking.

However, a higher effective tax rate, against an unusually low rate in the year-ago period, is expected to negatively impact Ameren's bottom line. This is expected to eat into profit by approximately 4 cents per share. In addition, the absence of a 2014 benefit resulting from a regulatory decision authorizing Ameren Illinois to recover previously disallowed debt redemption costs will reduce earnings by 3 cents per share.

Earnings Whispers

Our proven model does not conclusively show that Ameren is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Ameren is -5.56%, as the Most Accurate estimate stands at 17 cents, while the Zacks Consensus Estimate is pegged at 18 cents.

Zacks Rank: Ameren currently carries a Zacks Rank #3. Though this increases the predictive power of ESP, the company's negative ESP makes a surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few other operators in the electric utility space worth considering as our model shows that they too have the right combination of elements to post an earnings beat this quarter:

Spark Energy SPKE has an earnings ESP of +2.30% and a Zacks Rank #3. It will report quarterly results on Mar 29.

PG&E Corporation PCG has an earnings ESP of +2.22% and a Zacks Rank #3. It will report quarterly results on Feb 18.

Consolidated Edison ED has an earnings ESP of +1.82% and a Zacks Rank #3. It will report quarterly results on Feb 18.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMEREN CORP (AEE): Free Stock Analysis Report

CONSOL EDISON (ED): Free Stock Analysis Report

PG&E CORP (PCG): Free Stock Analysis Report

SPARK ENERGY (SPKE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

SPKE PCG AEE ED

Other Topics

Earnings Stocks

Latest Markets Videos