Ameren Earnings: 1 Reason This Dividend Stock is Ready to Deliver

Ameren reported earnings earlier this month, just missing on top line estimates and coming up short on the bottom line. But the company's currently in transition mode, and a tough quarter could create a unique buy opportunity for dividend stock investors. Here's what you need to know.

Number crunching

Ameren's Q2 sales slumped a seasonally adjusted 15.5% to $1.4 billion. Analysts weren't expecting much better, but their $1.5 billion estimate still proved too optimistic .

The utility made even less from less this quarter, as its bottom line shrunk faster than its top. Adjusted EPS clocked in at $0.44, equivalent to around 40% of Q2 2012's earnings and five cents below Mr. Market's mark .

For a peck of perspective, Ameren's annual revenue has fallen 12.9% over the past five years, while adjusted EPS has nosedived 240 % to hit -$4.01 in 2012.

<a href="http://ycharts.com/companies/AEE/chart/"><img src="http://media.ycharts.com/charts/c3219eee3c7a529a818a6f978dba55fa.png" alt="AEE Revenue Annual Chart" /></a><p style="font-size: 10px;"><a href="http://ycharts.com/companies/AEE/revenues_annual">AEE Revenue Annual</a> data by <a href="http://ycharts.com">YCharts</a></p>

Regulated riches?

In an increasingly competitive and volatile energy world, Ameren is exiting the bullpen of unregulated energy generation. The utility announced in March that it would be selling its merchant generation fleet to Dynegy for a cool $900 million. Ameren's Q1 was the first quarter it considered this division "discontinued operations ," but the company still felt a $0.05 per share squeeze this quarter as it continues to balance its books .

Ameren's exit couldn't come soon enough, as the main drag on its Q2 continuing operations came from refueling outage expenses at its Callaway nuclear plant. The refill cost the company $0.08 per share , while a $26 million regulator-demanded refund pushed earnings down another $0.06 .

But even as Ameren's past kept its Q2 earnings sub-par, the utility's future investments continue to set this company up for sustainable earnings. Ameren's regulated battles have been back and forth, but new rates for its transmission service already added on $0.08 per share to second quarter earnings .

Both Exelon and Ameren had reason to celebrate in May when Illinois politicians passed a controversial "smart" infrastructure bill that opened up new customer cost absorption options for the utilities. Exelon expects the bill to add $25 million on to this year's revenue, with $65 million more in 2014 .

Ameren also just received news this week that almost all of a $1.1 billion transmission line has been approved for construction. The project is the utility's largest single investment since the 1980's, and should provide it with a revenue stream to make any income investor interested .

Transmission projects are popping up all over the U.S. as utilities look for more financially favorable capital expenditures. NextEra Energy and Spectra Energy announced in July that they're teaming up to build a $3 billion natural gas pipeline in Florida. The project will serve each utility's own service needs, and capacity will also be contracted out to other companies .

Is Ameren attractive?

Utilities have taken a dip in the past month, and Ameren's latest earnings didn't do it any favors. In a year's time, shares haven't budged.

<a href="http://ycharts.com/companies/AEE/chart/"><img src="http://media.ycharts.com/charts/4b223d5287f68613f4c185c724938b92.png" alt="AEE Chart" /></a><p style="font-size: 10px;"><a href="http://ycharts.com/companies/AEE">AEE</a> data by <a href="http://ycharts.com">YCharts</a></p>

But macroeconomic pressures and a tough quarter present a value opportunity for long-term investors who can still see the light. From sales to book value to cash flow , the company's share price is at the industry average - but Ameren offers stability unseen for companies still competing over energy generation. With a 4.8% dividend yield to boot, this stock's a more solid investment than ever.

Even with regulated earnings, Ameren's offerings are still tied directly to volatile energy markets. Smart investors are diversifying their dividend portfolios beyond energy stocks, and we're here to help. Our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

The article Ameren Earnings: 1 Reason This Dividend Stock is Ready to Deliver originally appeared on Fool.com.

Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Exelon and Spectra Energy.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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