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Is a Beat in the Cards for Ameren (AEE) in Q2 Earnings?

Ameren Corporation AEE is set to release second-quarter 2017 results on Aug 4, before the market opens.

Last quarter, this utility reported an earnings surprise of 0.00%. Also, it surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings beat of 2.98%.

Let’s see how things are shaping up at the company prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Ameren is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +4.35%. This is because the Most Accurate estimate is 72 cents, while the Zacks Consensus Estimate is pegged lower at 69 cents. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ameren currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Ameren Corporation Price and EPS Surprise

 

Ameren Corporation Price and EPS Surprise | Ameren Corporation Quote

Factors at Play

For 2017, Ameren plans to invest $2.2 billion, including $785 million for Ameren Missouri, $480 million for Ameren Illinois Electric distribution, $255 million for Ameren Illinois Natural Gas, $375 million for Ameren Illinois Transmission, and $325 million for Ameren Transmission company of Illinois. Hence, we expect the second-quarter’s results to reflect a fraction of this investment.

Additionally, the unemployment rate in Ameren’s service territories is better than the national average. An improving economy is also likely to boost future utility demand in the state, thereby improving the company’s performance.

Moreover, the company’s service territories witnessed warmer-than-normal temperatures during the to-be-reported quarter. This, in turn, will result in higher household expenditures on cooling, which is expected to drive revenues.

Stocks to Consider

Here are a few operators in the electric utility space that you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Brookfield Renewable Partners L.P. BEP has an Earnings ESP of +75.00% and a Zacks Rank #3. The company is expected to report second-quarter results on Aug 4. You can see the complete list of today’s Zacks #1 Rank stocks here

Pinnacle West Capital Corporation PNW has an Earnings ESP of +4.31% and a Zacks Rank #3. The company is slated to release second-quarter results on Aug 3.

The AES Corporation AES has an Earnings ESP of +4.76% and a Zacks Rank #2. The company is slated to release second-quarter results on Aug 8.

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Ameren Corporation (AEE): Free Stock Analysis Report
 
Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
 
The AES Corporation (AES): Free Stock Analysis Report
 
Brookfield Renewable Partners L.P. (BEP): Free Stock Analysis Report
 
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