Ameren Corp (AEE) Earnings: One Super Sustainable Dividend Stock

Ameren Corp (NYSE:AEE) reported earnings last Thursday, missing on top- and bottom-line numbers. The utility is undergoing a massive renovation as it offloads its merchant generation fleet, and any transition inherently introduces some risk. Let’s look at what Q1 did for Ameren, and whether the utility’s on track to maintain its dividend stock title in the years ahead.

Number crunching
Ameren Corp (NYSE:AEE) reported Q1 sales of $1.48 billion, clocking in 11% below 2012’s first quarter results. But with big changes to its business model, a shrinking top line isn’t necessarily bad news. But unfortunately for investors, revenue also fell 9.3% short of analyst expectations.

On the bottom line, the news was worse. Adjusted EPS clocked in at $0.22, matching 2012’s earnings but underwhelming analysts’ expectations by a whopping 21.4%.

But since reporting earnings, shares of this dividend stock have headed 1.6% higher, beating out the S&P 500 and Dow Jones Utilities Index. With quarterly financials in the dumps, let’s see if fundamentals offer a clue to Ameren Corp (NYSE:AEE)’s future.

Ameren fundamentals
To understand Ameren’s elation, one needs look no further than March 14, when the utility announced the successful sale of its $900 million merchant generation fleet to Dynegy Inc. (NYSE:DYN).

Valued at $900 million, Q1 marks the first quarter with generation gone from Ameren’s earnings. Looking at current operating income alone, Ameren Corp (NYSE:AEE)’s EPS stayed at $0.22, but its Q1 2012 comparison point dropped 47% to $0.15.

While this might smell like some books are cooking, it hints at the sort of sustainable earnings that dividend stock investors might grow to expect from Ameren Corp (NYSE:AEE) in future quarters. The successful sale of its generation fleet was a huge boon for the utility, and its shares are up 7.5% in the three weeks since the announcement.

With sectorwide sales slumps, utilities are trying a myriad of ways to maximize margins. Exelon Corporation (NYSE:EXC)‘s March merger with Constellation Energy last July doubled its assets and theoretically added 25% to sales, and its most recent earnings report hints at good times ahead for this nuclear-centric utility.

Other utilities are focusing their fleets on (what they believe are) the fuels of the future. Atlantic Power Corp (NYSE:AT) is adding on natural gas and renewables (mostly wind), but it may hit some turbulence as gas prices head higher in the coming quarters. FirstEnergy Corp. (NYSE:FE) could find itself on the winning end as higher natural gas prices push up the cost competitiveness of its 61% coal capacity, while barely nudging the needle on its 6% natural gas stake.