Morningstar | Ameren Executing on Renewable Energy Growth Plans
We are reaffirming our $55 per share fair value estimate, no-moat rating, and stable moat trend after Ameren reported third-quarter operating EPS of $1.50, compared with $1.24 in the same year-ago period. Results were aided by favorable weather compared with milder temperatures last summer and infrastructure investments in Illinois and its transmission subsidiary.Management increased its 2018 earnings guidance range to $3.35 to $3.45, up from the prior range of $3.15-$3.35 per share. We plan on increasing our 2018 EPS estimate in line with management's revised guidance, but near-term weather-driven earnings increases have no effect on our long-term outlook. Management reaffirmed its long-term 5%-7% EPS growth through 2022, driven by 7% annual rate base growth.
Management continues to execute on the company's planned wind generation goals by 2020, announcing in the quarter a proposal to acquire a 157 MW wind generation facility in northwest Missouri, contingent upon regulatory approval for the certificate of need, which we expect. This is on top of the 400 MW wind generation facility in the northeastern part of the state that was recently unanimously approved by the Missouri Public Service Commission. Ameren aims to build 700 MW by 2020.
Ameren Missouri also recently elected to utilize electric grid modernization legislation (Senate Bill 565) passed earlier in the year. Management had previously indicated that the legislation could lead to $1 billion in investment from 2019 to 2023, which we have already included in our five-year outlook.
At the upcoming annual Edison Electric Institute financial conference, we expect an update on 2019 earnings guidance and financing details, an updated capital expenditure outlook given the recent passing of Senate Bill 564, and cash flow details.
Ameren is a public utility holding company. Through its subsidiary, Union Electric Company, the company operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Through its subsidiary, Ameren Illinois Company, the company operates rate-regulated electric transmission, electric distribution, and natural gas distribution businesses in Illinois. Through its Ameren Transmission Company of Illinois subsidiary, the company operates a Federal Energy Regulatory Commission rate-regulated electric transmission business. The company also has other subsidiaries that conduct other activities, such as providing shared services.
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