EUR 850.00 For Business Accounts Only

Morningstar | Favorable Weather Boosts Ameren's 2018 Results

We are reaffirming our $57 per share fair value estimate, no-moat rating, and stable moat trend after Ameren reported full-year operating EPS of $3.37, compared with $2.83 in the same year-ago period. Management initiated 2019 earnings guidance range to $3.15 to $3.35.  Management expects long-term 6%-8% EPS growth through 2023, driven by 8% annual rate base growth. The growth target is based off a weather-normalized $3.05 EPS for 2018.

Ameren's full-year results were significantly aided by a warmer summer and colder winter, with weather adding $0.42 per share. Higher rates at Ameren Missouri and infrastructure investments across its subsidiaries also helped results. Ameren's transmission earnings continue to impress, up nearly 16% year over year.

For 2019, earnings will be affected by an expectation for a return to normal weather and a refueling at the Callaway nuclear facility. This will be partially offset by continued infrastructure investments across its system and higher allowed returns at Ameren Illinois' electric distribution unit.

Management's biggest accomplishment in 2018 was attaining constructive utility legislation in Missouri. Management's patient yet persistent years-long efforts resulted in increased investment opportunities across the territory. The efforts have led to renewable energy investments as well as electric grid modernization investments in Missouri. Ameren has secured 557 MW of its 700 MW renewable goal. Continued improvement, and execution under the legislation, would lead us to reconsider our no moat rating.