American Electric Power Company Inc. AEP reported first-quarter 2015 operating earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.11 by 15.3%.
The quarterly figure also surpassed the year-ago earnings of $1.15 per share by 11.3%.
American Electric Power incurred a GAAP loss of $1.29 per share in the first quarter of 2015 compared with a loss of $1.15 per share in the year-ago quarter. The difference between GAAP and pro forma numbers was due to an impact of commodity hedging within its Generation & Marketing segment.
Total Revenue
American Electric Power’s first-quarter revenues of $4.7 billion surpassed the Zacks Consensus Estimate of $4.4 billion by 6.5% and the year-ago number of $4.6 billion by 1.1%.
Highlights of the Release
Operating expenses incurred in the reported quarter declined a marginal 0.3% year over year to $1.79 billion.
Operating income in first-quarter 2015 was $1.18 billion compared with $1.04 billion a year ago. The improvement was due to better year-over-year performance from its segments.
Segmental Performance
Vertically Integrated Utility Operations: Operating earnings in the quarter increased 7.6% to $299 million from $278 million a year ago. The upside was due to favorable rate decisions and a decrease in employee-related expenses.
Transmission & Distribution Operations: Operating earnings were $97 million in the quarter, in line with the prior-year figure.
AEP Transmission Holdco: This segment generated an operating income of $36 million during the quarter compared with $24 million in the first quarter of 2014, backed by increased transmission investment.
Generation and Marketing: Operating earnings were $183 million, up 12.3% from $163 million in the first quarter of 2014. The increase was due to favorable trading and marketing activity, as well as lower plant outage and maintenance costs.
AEP River Operations: The segment registered an operating income of $11 million as against $3 million a year ago, primarily due to a reduction in operating costs.
Financial Update
As of Mar 31, 2015, American Electric Power had $190.0 million in cash and cash equivalents compared with $163.0 million as of Dec 31, 2014.
Long-term debt as of Mar 31, 2015, was $16.77 billion compared with $16.18 billion as of Dec 31, 2014.
Upcoming Utility Releases
DTE Energy DTE is expected to release its first-quarter earnings on Apr 24, 2015. The Zacks Consensus Estimate stands at $1.49.
NextEra Energy, Inc. NEE is expected to release its first-quarter earnings on Apr 29, 2015. The Zacks Consensus Estimate stands at $1.28.
Duke Energy Corp. DUK is expected to release its first-quarter earnings on May 1, 2015. The Zacks Consensus Estimate stands at $1.12.
Guidance
American Electric Power reiterated its 2015 operating earnings guidance in the range of $3.40-$3.60 per share.
Our View
American Electric Power’s strategy to invest in regulated operations and strengthen its transmission operation yielded positive results.
In the next three years, the company will allocate nearly 70% of its investment to transmission and distribution operations to further strength this segment.
American Electric Power currently has a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment