American Electric Power Company Inc (NYSE:AEP) reported earnings last week, the first of the big utilities (read “dividend stocks”) to run its Q2 numbers. While American Electric Power Company Inc (NYSE:AEP) missed slightly on both top- and bottom=line expectations, there’s more to this dividend stock’s story that you need to know. Let’s take a look.
For Q2 2013, American Electric Power Company Inc (NYSE:AEP) reported revenue of $3.58 billion, just shy of analysts’ $3.64 billion estimate. Sales have remained relatively steady over the past couple of years, despite a more erratic bottom line.
For this quarter, adjusted EPS clocked in at $0.73, underwhelming analyst expectations by a penny. Neither top-line nor bottom-line metrics were much off the mark, and Mr. Market seems to have thought better of its day-of stock-price punishment. By Friday afternoon, shares were back up beyond its July 25 earnings report price.
Beyond the numbers
Perhaps taking advantage of a quantitatively steady earnings report, CEO Nick Akins focused investors’ attention more on American Electric Power Company Inc (NYSE:AEP)’s future than on its recent past.
First up: coal. While coal has historically offered cheap energy, recent environmental regulations and cheaper natural gas have pushed many coal-centric utilities to back off the solid black gold.
American Electric Power Company Inc (NYSE:AEP) is no exception and is making headway to reduce its coal consumption. In his earnings call, Akins specifically mentioned President Obama’s climate change policy and the EPA’s regulatory inklings. The utility has already dropped emissions dramatically and plans to reduce its coal capacity by 27% by 2016.
American Electric Power Company Inc (NYSE:AEP)’s not alone. FirstEnergy Corp. (NYSE:FE) announced earlier this month that it plans to retire two more coal-fired power plants that currently account for a whopping 10% (2,080 MW) of its total capacity.
Dominion Resources, Inc. (NYSE:D) took its own take on the coal situation by converting three coal plants to biomass. The first facility went operational a few weeks ago, and the others will come online by 2014 to add 153 MW to the utility’s generation fleet.