Ameren Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

S&P 500 (NYSE:SPY) component Ameren Corporation (NYSE:AEE) reported its results for the second quarter. Through its subsidiaries, Ameren Corporation operates rate-regulated electric generation, transmission and distribution businesses, rate-regulated natural gas transmission and distribution businesses and non-rate-regulated electric generation businesses.

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Ameren Earnings Cheat Sheet for the Second Quarter

Results: Net income for Ameren Corporation fell to $139 million (57 cents per share) vs. $152 million (64 cents per share) a year earlier. This is a decline of 8.6% from the year earlier quarter.

Revenue: Rose 4.5% to $1.78 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: AEE reported adjusted net income of 59 cents per share. By that measure, the company fell short of mean estimate of 63 cents per share. It beat the average revenue estimate of $1.73 billion.

Quoting Management: “Our second quarter 2011 core earnings results were on track with our expectations,” said Thomas R. Voss, chairman, president and chief executive officer of Ameren Corporation. “We were challenged by an unusually large number of storms in the first half of this year, but our employees responded aggressively and effectively to restore service and meet our customers’ expectations. Our management team also took action during the quarter to align spending with business conditions. As a result, today we are narrowing our 2011 core earnings guidance range to $2.30 to $2.55 per share. We also remain on track to generate positive free cash flow this year. This guidance incorporates second quarter results, the recent Missouri electric rate case decision and our continued commitment to aligning overall spending with regulatory outcomes and market and economic conditions.”

Key Stats:

Gross margin shrank 1.7 percentage points to 34.8%. The contraction appeared to be driven by increased costs, which rose 7.3% from the year earlier quarter while revenue rose 4.5%.

The company has now fallen short of analyst estimates for the last three quarters. It missed the mark by 12 cents in the first quarter and by one cent in the fourth quarter of the last fiscal year.

Over the last five quarters, revenue has increased 6.9% on average year over year. The biggest increase came in the third quarter of the last fiscal year, when revenue rose 24.2% from the year earlier quarter.

Competitors to Watch: CenterPoint Energy, Inc. (NYSE:CNP), Integrys Energy Group, Inc. (NYSE:TEG), The Empire District Electric Co. (NYSE:EDE), NorthWestern Corporation (NYSE:NWE), CMS Energy Corporation (NYSE:CMS), NiSource Inc. (NYSE:NI), CH Energy Group, Inc. (NYSE:CHG), Dominion Resources, Inc. (NYSE:D), Wisconsin Energy Corp. (NYSE:WEC), and DTE Energy Company (NYSE:DTE).

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(Source: Xignite Financials)