Ameren earnings per share for 2020 expected in management's forecast range

Ticker: AEE

Author: Stock Analyst  Date: 2021/02/18

On Friday, February 19, Ameren, a Missouri-based power grid holding company, will release its 4Q2020 financial results. The Reuters consensus for refined EPS for Q4 and 2020 is $ 0.42 and $ 3.45, respectively. The annual adjusted EPS in 2021, if the forecast is justified, will grow by 2.99% y / y and will be slightly below the middle of the company's forecast range of $ 3.40-3.55.

Ameren's net profit growth is expected to be driven primarily by the regulator's increase in regulatory ROE for the Ameren Transmission segment, as well as the use of new infrastructure facilities in the Ameren Illinois Natural Gas division.

In addition, for all segments for 9 months. there was a significant decrease in material costs (-11% YoY). The key driver of this trend was the reduction in fuel costs (-22.5% YoY) and purchased capacity (-13% YoY). At the same time, there was also a negative factor affecting the amount of net profit - a decrease in the key rate of the US Federal Reserve, to which ROE standards are tied in a number of AEE divisions, from 1.75% at the beginning of the year to 0.25% in March 2020.

Our current recommendation for Ameren is HOLD with a target of $ 74.29, which corresponds to a potential of 2.24% excluding dividends. NTM's dividend yield is expected to be 2.89%.