American Electric Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component American Electric (NYSE:AEP) will unveil its latest earnings on Friday, July 20, 2012. American Electric Power is a public utility holding company that provides electric service, consisting of generation, transmission, and distribution, to its retail customers through subsidiaries.

American Electric Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of 72 cents per share, a decline of 1.4% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from 71 cents. Between one and three months ago, the average estimate moved down. It has risen from 70 cents during the last month. For the year, analysts are projecting profit of $3.04 per share, a decline of 2.6% from last year.

Past Earnings Performance: The company met estimates last quarter after beating the forecasts in the prior two. In the first quarter, the company reported net income of 80 cents per share versus a mean estimate of profit of 80 cents per share. In the fourth quarter of the last fiscal year, the company beat estimates by 0 cents.

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Stock Price Performance: Between May 17, 2012 and July 16, 2012, the stock price had risen $4.43 (11.8%), from $37.43 to $41.86. The stock price saw one of its best stretches over the last year between April 23, 2012 and May 1, 2012, when shares rose for seven straight days, increasing 2.2% (+83 cents) over that span. It saw one of its worst periods between April 2, 2012 and April 10, 2012 when shares fell for six straight days, dropping 4.3% (-$1.66) over that span.

A Look Back: In the first quarter, profit rose 9.9% to $389 million (80 cents a share) from $354 million (73 cents a share) the year earlier, meeting analyst expectations. Revenue fell 2.8% to $3.63 billion from $3.73 billion.

Analyst Ratings: There are mostly holds on the stock with nine of 17 analysts surveyed giving that rating.

Key Stats:

After experiencing income increases the last three quarters, the company is hoping to keep the good news coming with this earnings announcement. Net income rose 67.1% in the third quarter of the last fiscal year and 75.7% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 7.4% in the second quarter of the last fiscal year, 6.6% in the third quarter of the last fiscal year and 0.3%in the fourth quarter of the last fiscal year before dropping in the first quarter.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 0.66 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, a ratio less than one could indicate a company may have difficulty meeting current obligations.

Wall St. Revenue Expectations: Analysts are projecting a decline of 0.6% in revenue from the year-earlier quarter to $3.58 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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