Goldman Discusses American Electric Power's Earnings (AEP)

Goldman Sachs is out with a research note on American Electric Power AEP after it reported earnings. It has a Neutral rating on shares. In a note to investors, Goldman writes, "Gross margins exceeded our expectations in (1) Ohio, coming in at $715 mn versus GS at $678 mn, (2) the Western utility segments, beating our forecast by $10 mn, (3) lower than expected parent company costs, by $8 mn and (4), off-system sales, roughly $18 mn above our outlook. Lower than expected margins in the Eastern utilities and $13 mn in higher than expected depreciation costs offset better than expected results in Ohio, the Western utilities and in off system sales. Industrial demand trends remained strong, up 7.1% yoy, partially offsetting a 4.6% decline in residential demand, both weather-driven and signs of secular weakness in residential demand. Small commercial demand – weather-normalized - across AEP's utilities rose 1.2% - a positive trend given commercial demand lagged in 2010." Shares of AEP are down 15 cents to $35.38,a loss of 0.4% so far this morning.