American Electric Power Narrows 2016 Operating EPS View, Raises CAPEX Forecast

(RTTNews) - American Electric Power (AEP) narrowed its 2016 operating earnings guidance range and reaffirmed its 2015 operating earnings guidance. The company also forecast its capital expenditure budgets for 2016 through 2018. It increased its 2016 capital expenditure budget to $5 billion.

AEP narrowed its 2016 operating earnings guidance range to $3.60 to $3.80 per share from the previous range of $3.45 to $3.85 per share. Analysts polled by Thomson Reuters expect the company to report earnings of $3.72 per share for 2016. Analysts' estimates typically exclude special items.

Operating earnings guidance for 2015 was increased and narrowed to $3.67 to $3.77 per share October 22. Analysts expect the company to report earnings of $3.73 per share for 2015.

AEP plans to invest $13 billion in capital from 2016 through 2018 with 96 percent of that investment in its regulated businesses. AEP increased its 2016 capital expenditure budget to $5 billion. The company forecast its 2017 and 2018 capital investment budgets at $4 billion annually.

"More than $9.3 billion of our $13 billion capital plan will be invested in our wires businesses. Transmission investment opportunities continue to grow as we rebuild and enhance aging infrastructure and create a grid that is more robust, resilient and able to support current and future generation changes. Our ability to invest in our regulated operations gives us confidence in our 4 to 6 percent earnings growth rate," said Nicholas K. Akins, AEP's chairman, president and chief executive officer.

AEP said it will invest at least $5.7 billion in its transmission businesses over the next three years through AEP Transmission Holding Co. and AEP's regulated utility operating companies. AEP Transmission Holding Co. contributed 16 cents per share to earnings in 2013. Its earnings are on track to more than double to 40 cents per share this year and are expected to nearly double again to 77 cents per share in 2018.

AEP has set a targeted dividend payout ratio of 60 to 70 percent of operating earnings. The company increased its dividend in October by 5.7 percent on an annual basis to $2.24 per share.

AEP expects to control operations and maintenance expenses, net of earnings offsets, through continuation of its process improvement and cost discipline programs, which are on track to realize $205 million in earnings improvement in 2016.

AEP closed Friday trading at $53.96, down $1.97 or 3.52%. In after hours, the stock further dropped $0.16 or 0.29%.