American Electric Power Co., Inc. AEP reported third-quarter 2015 operating earnings of $1.06 per share, beating the Zacks Consensus Estimate of $1.00 by 6%.
Earnings also increased 5% from $1.01 per share in the year-ago quarter, supported by continued investments in its regulated businesses.
Total Revenue
American Electric Power’s third-quarter revenues of $4,565 million improved 6.1% from $4,302 million in the year-ago quarter.
Highlights of the Release
Operating expenses incurred in the reported quarter inched up nearly 2.7% year over year to $1,898 million.
Operating income in third-quarter 2015 was $981 million, up 6.1% from $925 million a year ago.
Segmental Performance
Vertically Integrated Utility Operations: Operating earnings in the quarter increased 25.1% to $274 million from $219 million a year ago. The upside was driven by favorable rate impacts and weather, partially offset by reduced off-system sales and higher operations and maintenance expenses.
Transmission & Distribution Utilities: Operating earnings were $113 million in the quarter, up 22.8% from $92 million a year ago due to an unfavorable regulatory provision recorded in the third quarter of 2014.
AEP Transmission Holdco: This segment generated operating income of $46 million, up 7% from $43 million in the third quarter of 2014, backed by increased transmission investment.
Generation and Marketing: Operating earnings were $93 million, down 20.5% from $117 million in the third quarter of 2014. The decrease was due to lower capacity revenue, partially offset by favorable hedging activity.
AEP River Operations: The segment registered operating income of $4 million compared with $11 million a year ago, primarily due to loss incurred in a transportation-related equity investment.
Financial Update
As of Sep 30, 2015, American Electric Power had $178.0 million in cash and cash equivalents compared with $163.0 million as of Dec 31, 2014.
Long-term debt was $17.6 billion as of Sep 30, 2015 compared with $16.1 billion as of Dec 31, 2014.
Guidance
American Electric Power raised its 2015 operating earnings guidance to the range of $3.67–$3.77 per share from the prior range of $3.50–$3.65 per share.
Zacks Rank
American Electric Power currently carries a Zacks Rank #2 (Buy).
Upcoming Peer Releases
DTE Energy Company DTE is scheduled to report third-quarter 2015 results on Oct 23, 2015.
Consolidated Edison, Inc. ED is scheduled to report third-quarter 2015 results on Nov 5, 2015.
Ameren Corporation AEE is expected to report its third-quarter 2015 results on Nov 6, 2015.
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