AMEREN CORP. $33 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.8%; TSINetwork Rating: Average; www.ameren.com) sells power and natural gas to 3.3 million clients in Illinois and Missouri.
In the three months ended March 31, 2012, Ameren’s earnings fell 11.7%, to $53 million, or $0.22 a share. A year earlier, it earned $60 million, or $0.25 a share. These figures exclude unusual items, such as a recent writedown of a coal-fired power plant.
Revenue fell 12.9%, to $1.7 billion from $1.9 billion. That was mainly because warmer-than usual winter weather prompted consumers to use less electricity and natural gas for home heating. As a result, electricity sales (which account for 79% of Ameren’s revenue) fell 10.9%, and gas sales (21% of revenue) fell 19.8%.
In response to falling power prices and rising fuel costs, Ameren is scaling back its merchantpower operations, which supply 20% of its total revenue. Unlike its regulated business, the company sells the power from these plants at the current market price.
Ameren trades at 14.2 times its projected 2012 earnings of $2.32 a share. However, the cost of upgrading its plants to comply with tougher environmental laws could hurt its ability to raise the $1.60 dividend, which yields 4.8%.
Ameren is a hold.
