Ameren Corp (AEE)

Conclusion

Ameren Corporation is a US utility holding company based in Saint Louis. Its regulated businesses generate, transmit and distribute electricity and distribute natural gas in Missouri and Illinois. At a share price of 114.02 USD on 2026-11-09, the market capitalisation is 31.57 billion USD.

The verdict is fair. The fair value band runs from 83.37 to 125.05 USD with a midpoint of 104.21 USD, a margin of safety of -8.6% at the current price. The price-to-earnings ratio of 19.7 is below its ten-year median of 20.9, while enterprise value to EBITDA of 12.4 is above its median of 11.4. A discounted cash flow value is not available because free cash flow is negative, and the growth implied by the price (reverse DCF) is not available either. The company has delivered revenue growth of 8.7% a year over five years and earnings per share growth of 8.8% a year over the same period.

What holds the case up is the operating margin of 25.2%, against a ten-year median of 21.5%, and seven earnings beats in the last eight quarters. What would break it is leverage, with net debt at 5.15 times EBITDA, and the Altman Z-score of 0.96, which sits in the distress zone. Free cash flow conversion of -123.6% over the last twelve months and a return on invested capital of 6.6%, below the weighted average cost of capital of 7.1%, add to the concern.

Financial health

Financial strength is red, held down by three weak measures and supported by none. The current ratio is 0.74 and the quick ratio is 0.39, both below one. Net debt to EBITDA is 5.15 times on a trailing twelve-month basis, and debt to equity is 1.58. Interest coverage of 3.19 times is neutral. The Altman Z-score of 0.96 falls in the distress zone, but the model was designed for manufacturers, so for a regulated utility it is only a rough guide. Insolvency risk: low, about 1.3% by the estimate of the Ohlson model over one to two years. Leverage is structural to regulated utilities, but the margin for error is thin, and the company's debt maturity schedule is not part of this analysis.

Earnings quality

Earnings quality is red, because cash generation lags reported profit and is the single weak point in the scorecard. Free cash flow conversion is -123.6% over the last twelve months and -113.7% on a five-year basis. The accrual ratio is -4.1%, which points to cash flow ahead of accounting profit. Stock-based compensation is 0.35% of revenue, and free cash flow after it is -2.01 billion USD. The share count has grown 1.8% a year over five years, so there have been no net buybacks. The Piotroski score is 6 out of 9. The Beneish M-score is not available. Earnings have beaten estimates in seven of eight quarters, with an average surprise of 3.1%. Estimate revisions are minimal: the current-year estimate changed by 0.1% over 90 days, and the next-year estimate by -0.3%, with one downward revision in each case over the last 30 days.

Profitability

Profitability is green. The operating margin of 25.2% is above its ten-year median of 21.5%, and the net margin of 17.9% is above its median of 14.5%. The gross margin of 39.2% is below its median of 45.7%, which is typical of a utility where costs sit above the gross line. Operating margin stability is 5.6%. The key number is return on invested capital of 6.6% against a weighted average cost of capital of 7.1%, and the given difference is -0.4%, so the company currently earns slightly less than its cost of capital. Return on equity of 11.3% is flattered by leverage: the DuPont split shows a net margin of 16.6%, an asset turnover of 0.18 and an equity multiplier of 3.62.

Growth

Growth is green. Revenue has grown at a compound rate of 3.4% over three years, 8.7% over five years and 3.7% over ten years. Earnings per share have grown at 8.9% over three years, 8.8% over five years and 7.5% over ten years. Revenue rose in six of the ten comparable years. The growth in the five-year figures is stronger than the three-year figure, so recent momentum is slower than the longer record. Analysts expect next-year earnings per share growth of 7.5%.

Valuation

Valuation is yellow, because the price sits close to the fair value band while the multiples are mixed. The price-to-earnings ratio of 19.7 is 5.6% below its ten-year median of 20.9. Enterprise value to EBITDA of 12.4 is 8.6% above its median of 11.4, price to sales of 3.5 is 21.1% above its median of 2.9, and price to book of 2.2 is 3.8% above its median of 2.1. Price to free cash flow cannot be assessed. The discounted cash flow value is not available because the starting free cash flow is negative; the model inputs are a discount rate of 8.9% and a terminal growth rate of 2.5%. The fair value from historical multiples is 104.21 USD. The fair value band is built on fixed assumptions and is not a price target. The dividend yield is 2.6%, but free cash flow is negative, so the dividend is not covered by free cash flow.

Risks

The main risk is leverage. Net debt at 5.15 times EBITDA and a current ratio of 0.74 leave little room if earnings or financing costs move against the company. Negative free cash flow means that investment and dividends depend on borrowing or equity, and the share count has grown. Return on invested capital below the cost of capital means that growth does not yet create value on this measure. The Altman Z-score is in the distress zone, although the model is not designed for utilities. Several values are not available: the Beneish M-score, the discounted cash flow value and the reverse DCF. This analysis has no debt maturity schedule and no revenue split by segment, so refinancing risk and the contribution of each business cannot be judged.