Why Is Ameren (AEE) Up 3.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Ameren (AEE). Shares have added about 3.5% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Ameren due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ameren Q3 Earnings Beat Estimates, Revenues Fall Y/Y

Ameren Corporation’s third-quarter 2023 earnings of $1.87 per share surpassed the Zacks Consensus Estimate of $1.80 by 3.9%. The reported figure also increased 7.5% year over year.

The year-over-year rise in the bottom line was driven by increased infrastructure investments made across all business segments. New Ameren Missouri electric service rates, effective during the quarter, also contributed to the earnings growth.

Total Revenues

Total revenues came in at $2,060 million in the reported quarter, which decreased 10.7% year over year. Revenues also missed the Zacks Consensus Estimate of $2,373 million by 13.2%.

Highlights of the Release

Ameren’s total electricity sales volumes declined 3.1% to 19,098 million kilowatt-hours (kWh) in the third quarter compared with the 19,702 million kWh in the year-ago quarter. Gas volumes decreased to 27 million dekatherms from 29 million dekatherms in the prior-year period.

Total operating expenses were $1,446 million, down 15.3% year over year. The company’s interest expenses in the third quarter were $152 million compared with the prior-year quarter’s $126 million.

Segmental Results

The Ameren Missouri segment reported earnings of $411 million in the third quarter compared with $397 million a year ago. The increase was due to higher infrastructure investments and new electric rates.

The Ameren Illinois Electric Distribution segment reported earnings of $66 million in the third quarter compared with $51 million registered in the year-ago period. The improvement highlighted increased infrastructure spending and a higher allowed return on equity due to a higher projected average 30-year U.S. Treasury bond yield in 2023.

The Ameren Illinois Natural Gas segment incurred a loss of $5 million in the third quarter compared with a loss of $4 million in the year-ago quarter. The year-over-year deterioration can be attributed to higher depreciation and amortization expenses.

The Ameren Transmission segment reported earnings of $86 million in the third quarter compared with $78 million in the prior year, driven by increased earnings on infrastructure investments.

Financial Condition

Ameren reported cash and cash equivalents of $8 million as of Sep 30, 2023, compared with the cash balance of $10 million at the 2022-end.

As of Sep 30, 2023, the long-term debt totaled $13,829 million compared with $13,685 million as of Dec 31, 2022.

During the nine months ended Sep 30, 2023, the cash flow from operating activities amounted to $2,031 million compared with $1,599 million generated in the prior-year period.

Guidance

Ameren updated its 2023 guidance. AEE currently expects to generate earnings per share (EPS) in the range of $4.30-$4.45, narrower than the prior guidance range of $4.25-$4.45.

Currently, the Zacks Consensus Estimate for 2023 earnings is pegged at $4.37 per share. The figure is a tad below the midpoint of the company’s guidance.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -7.09% due to these changes.

VGM Scores

Currently, Ameren has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ameren has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Ameren belongs to the Zacks Utility - Electric Power industry. Another stock from the same industry, AES (AES), has gained 16.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.

AES reported revenues of $3.43 billion in the last reported quarter, representing a year-over-year change of -5.3%. EPS of $0.60 for the same period compares with $0.63 a year ago.

For the current quarter, AES is expected to post earnings of $0.71 per share, indicating a change of +44.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.5% over the last 30 days.

AES has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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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.

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