Ameren reported earnings last Thursday, missing on top- and bottom-line numbers. The utility is undergoing a massive renovation as it offloads its merchant generation fleet, and any transition inherently introduces some risk. Let's look at what Q1 did for Ameren, and whether the utility's on track to maintain its dividend stock title in the years ahead.

Number crunching
Ameren reported Q1 sales of $1.48 billion, clocking in 11% below 2012's first quarter results. But with big changes to its business model, a shrinking top line isn't necessarily bad news. But unfortunately for investors, revenue also fell 9.3% short of analyst expectations.

On the bottom line, the news was worse. Adjusted EPS clocked in at $0.22, matching 2012's earnings but underwhelming analysts' expectations by a whopping 21.4%. 


But since reporting earnings, shares of this dividend stock have headed 1.6% higher, beating out the S&P 500 and Dow Jones Utilities Index. With quarterly financials in the dumps, let's see if fundamentals offer a clue to Ameren's future.

Ameren fundamentals
To understand Ameren's elation, one needs look no further than March 14, when the utility announced the successful sale of its $900 million merchant generation fleet to Dynegy

Valued at $900 million, Q1 marks the first quarter with generation gone from Ameren's earnings. Looking at current operating income alone, Ameren's EPS stayed at $0.22, but its Q1 2012 comparison point dropped 47% to $0.15.

While this might smell like some books are cooking, it hints at the sort of sustainable earnings that dividend stock investors might grow to expect from Ameren in future quarters. The successful sale of its generation fleet was a huge boon for the utility, and its shares are up 7.5% in the three weeks since the announcement.

With sectorwide sales slumps, utilities are trying a myriad of ways to maximize margins. Exelon's March merger with Constellation Energy last July doubled its assets and theoretically added 25% to sales, and its most recent earnings report hints at good times ahead for this nuclear-centric utility.

Other utilities are focusing their fleets on (what they believe are) the fuels of the future. Atlantic Power is adding on natural gas and renewables (mostly wind), but it may hit some turbulence as gas prices head higher in the coming quarters. FirstEnergy could find itself on the winning end as higher natural gas prices push up the cost competitiveness of its 61% coal capacity, while barely nudging the needle on its 6% natural gas stake.

Regulation elation
For Ameren, fuel price wars will matter less and less as it heads into regulation. There may be incredible winners (and losers) from strategic picks for unregulated energy portfolios, but Ameren has opted for potentially smaller but inarguably steadier sales for its dividend stock income investors.

Looking ahead, Ameren still needs to offload three gas-fired energy centers, which it expects to do by the end of the year. And now that it's fully immersed in regulatory waters, the utility will need to fight hard for approvals.

Regulatory wins for Missouri and Illinois transmission services helped boost earnings this past quarter, and the utility expects to invest $2.2 billion in transmission projects by 2017. Over the four years, the utility expects to grow its rate base at an above-average 7% compound annualized growth rate.

Is Ameren A+ material?
In fiscal 2012, Ameren's net income dropped into the red for a whopping $974 million loss. But things are looking up -- and fast -- for this strategically regulating utility. With its current 4.4% dividend yield and sustainable sales for the years ahead, I'm making an "outperform" call on my Motley Fool CAPS page for this dividend stock and am looking forward to seeing where it heads in the quarters to come.

In the generation business, nuclear is one of the steadiest sources of income around. As the nation moves increasingly toward clean energy, Exelon is perfectly positioned to capitalize on having the largest nuclear fleet in North America. This strength, combined with an increased focus on balance sheet health and its recent merger with Constellation, places Exelon and its resized dividend on a short list of the top utilities. To determine if Exelon is a good long-term fit for your portfolio, you're invited to check out The Motley Fool's premium research report on the company. Simply click here now for instant access.

The article Ameren Earnings: 1 Super Sustainable Dividend Stock originally appeared on Fool.com.

Motley Fool contributor Justin Loiseau has no position in any stocks mentionedbut he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo. The Motley Fool recommends Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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