Ameren: Improving Growth Prospects But Still Expensive

2025-03-16 08:44:22 ET

Summary

• Ameren Corporation's service territory includes eastern Missouri and most of Illinois, with significant customer growth potential in the St. Louis metropolitan area.
• Despite a slight population decline in St. Louis since 2020, Ameren's revenue and net income have shown steady growth.
• Ameren has entered into agreements with various customers to provide a sizable amount of power to data centers over the next few years, improving its growth prospects.
• Ameren plans to invest $26.3 billion from 2025 to 2029, anticipating a 9.2% compound annual growth rate in its rate base, driven by increased electricity demand.
• While Ameren's stock outperformed the S&P 500 and utility sector, it remains relatively expensive compared to peers, with a modest 2.87% dividend yield.

Ameren Corporation ( AEE ) is an electric and natural gas utility that serves customers in the eastern half of Missouri as well as most of Illinois, excluding Chicago:

As we can see, the company’s service territory covers a very wide geographic area, but much of its territory consists of rural farmland. As the company’s service territory does not include the massive city of Chicago, Illinois, the largest city in its territory appears to be St. Louis, Missouri, which has a population of approximately 279,695 people. However, the greater St. Louis area is much larger, with recent data showing that the fifteen-county St. Louis Metropolitan Statistical Area contains approximately 2.79 million people. Naturally, not all of these people will be customers of Ameren Corporation. After all, children do not pay electric bills, and many households have more than a single occupant. However, we can still see that the St. Louis area accounts for a significant proportion of Ameren Corporation’s customer base....

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