Ameren Corporation (AEE), headquartered in Saint Louis, Missouri, generates and delivers electricity, and distributes natural gas to its customers. Valued at $24.4 billion by market cap, the company generates a net capacity of nearly 10,200 megawatts of electricity and owns more than 7,500 circuit miles of transmission lines.
Shares of this public utility holding company have underperformed the broader market considerably over the past year. AEE has gained 16% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 32.3%. In 2024, AEE’s stock rose 24%, compared to the SPX’s 24.7% rise on a YTD basis.
Narrowing the focus, AEE has also lagged behind the iShares U.S. Utilities ETF (IDU). The exchange-traded fund has gained about 28.2% over the past year. Moreover, the ETF’s 24.6% gains on a YTD basis outshines the stock’s returns over the same time frame.
AEE's underperformance can be linked to a decrease in allowed return on equity for 2024 as outlined in the new multi-year rate plan. The company has also been affected by challenges stemming from the introduction of new delivery service rates, which have had a negative impact on their financial performance.
On Nov. 6, AEE shares closed up marginally after reporting its Q3 results. Its adjusted EPS of $1.87 did not meet Wall Street expectations of $1.91. The company’s revenue was $2.17 billion, falling short of Wall Street forecasts of $2.21 billion. AEE expects full-year adjusted EPS to be between $4.55 and $4.69.
For the current fiscal year, ending in December, analysts expect AEE’s EPS to grow 5.3% to $4.61 on a diluted basis. The company’s earnings surprise history is disappointing. It missed the consensus estimate in three of the last four quarters while beating the forecast on another occasion.
Among the 16 analysts covering AEE stock, the consensus is a “Moderate Buy.” That’s based on nine “Strong Buy” ratings, six “Holds,” and one “Strong Sell.”
This configuration is more bullish than two months ago, with six analysts suggesting a “Strong Buy.”
On Nov. 8, Evercore ISI analyst Durgesh Chopra maintained a “Hold” rating on AEE with a price target of $89.
The mean price target of $89.78 represents a marginal premium to AEE’s current price levels. The Street-high price target of $98 suggests an upside potential of 9.2%.
