AMEREN CORP. $34 - New York symbol AEE

AMEREN CORP. $34 (New York symbol AEE; Income Portfolio, Utilities sector; Shares outstanding: 242.6 million; Market cap: $8.2 billion; Price-to-sales ratio: 1.2; Dividend yield: 4.7%; TSINetwork Rating: Average; www.ameren.com) sells power and natural gas to 3.3 million customers in Illinois and Missouri.

The company is selling its energy marketing business and five of its non-regulated coal-fired power plants in Illinois to Dynegy Inc. (New York symbol DYN). It aims to complete the sale in the fourth quarter of 2013.

Ameren’s unregulated power plants supply 20% of its revenue. However, power demand has fallen in Illinois, and Ameren is paying more to comply with stricter environmental regulations. That has cut these plants’profits.

As a result, Ameren will receive no cash for these facilities. However, Dynegy will assume $825 million of their debt. Ameren also expects to realize $180 million of tax benefits from the sale by 2015.

If you disregard these plants’ contributions, Ameren would have earned $54 million, or $0.22 a share, in the three months ended March 31, 2013. That’s up 45.9% from $37 million, or $0.15 a share, a year earlier. Colder winter weather pushed up demand for electricity and natural gas. Revenue rose 4.5%, to $1.5 billion from $1.4 billion.

Ameren trades at 16.1 times its projected 2013 earnings of $2.11 a share. The $1.60 dividend yields 4.7%.

Ameren is a hold.

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