Why Is Ameren (AEE) Down 10.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Ameren (AEE). Shares have lost about 10.8% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ameren due for a breakout? 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 Q4 Earnings Beat Estimates, Revenues Down Y/Y

Ameren Corporation’s fourth-quarter 2019 earnings of 38 cents per share from continuing operations exceeded the Zacks Consensus Estimate of 31 cents by 22.6%. Moreover, the reported figure soared 35.7% from 28 cents registered in the year-ago quarter.

The company generated 2019 adjusted earnings of $3.35 per share from continuing operations, which surpassed the Zacks Consensus Estimate of $3.29 by 1.8%. The bottom line, however, declined 0.6% from the year-ago tally.

Total Revenues

Total revenues came in at $1,316 million in the reported quarter, which declined 7.3% year over year owing to lower electric as well as natural gas sales volumes. Revenues also missed the Zacks Consensus Estimate of $1,452 million by 9.4%.

In 2019, the company generated total revenues of $5,910 million, which declined 6% from the year-ago tally. The figure also lagged the Zacks Consensus Estimate of $6,040 million by 2.2%.

Highlights of the Release

Ameren’s total electricity sales volumes declined 12% to 17,178 million kilowatt hours (kWh) compared with 19,537 million kWh in the year-ago quarter. However, gas volumes expanded 3.3% to 63 million dekatherms.

Total operating expenses summed $1,137 million, down 9.3% year over year.

The company’s interest expenses in the fourth quarter were $91 million compared with $99 million a year ago.

Segment Results

The Ameren Missouri segment reported operating income of $426 million in 2019 compared with $482 million in 2018. The year-over-year decline was a result of lower electric retail sales during the year.

The Ameren Illinois Electric Distribution segment reported operating income of $146 million in 2019 compared to $139 million in 2018. The year-over-year rise reflected increased earnings on infrastructure and energy efficiency investments.

The Ameren Illinois Natural Gas segment reported operating income of $84 million in 2019 compared to $71 million in 2018. The year-over-year improvement was due to higher delivery service rates and increased earnings on infrastructure investments.

The Ameren Transmission segment reported operating income of $185 million in 2019 compared with $164 million in 2018. The improvement reflected increased earnings on infrastructure investments.

Financial Condition

Ameren reported cash and cash equivalents of $16 million as of Dec 31, 2019, in line with the figure registered at 2018 end.

As of Dec 31, 2019, long-term debt totaled $8,915 million compared with $7,859 million as of Dec 31, 2018.

In 2019, cash from operating activities amounted to $2,170 million, similar to the figure as of Dec 31, 2018.

Guidance

Ameren issued its 2020 guidance. The company expects its earnings to be in the range of $3.40-$3.60 per share. Currently the Zacks Consensus Estimate for the company’s 2020 earnings is pegged at $3.47 per share, lower than the mid-point of the company provided guidance.

Ameren also affirmed its 2018 through 2023 compound annual earnings per share growth expectations of 6% to 8%

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Ameren has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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

Ameren has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.