After the closing bell sounded last night, Ohio-based utilities firm American Electric Power (NYSE: AEP) issued news that should have a profound impact on the stock in today's trading session. The company lowered its earnings forecast for fiscal 2009 thanks to current operating and economic factors, along with dilution from its planned issuance of new equity. AEP also lowered its capital spending plant for fiscal 2010 and will not provide guidance for 2010 or beyond.The company now expects fourth-quarter earnings between $2.75 and $3.05 per share, which is lower than the earlier estimate of $3.00 to $3.40 per share. Expectations call for earnings of $3.14 per share on a full-year basis.
AEP's president and CEO stated, "In addition to the effect of dilution from our planned stock issuance, the ongoing economic downturn is a significant factor in our revised guidance." The company does believe that recent rate increases may help offset some of the economy's impact on its earnings.
Technically, shares of the electric company are struggling with resistance in the $25 - $26 region. Unfortunately for the company, it was trading in the $34 region earlier this year. The losses aren't shocking, as the economic downturn has impacted many sectors. However, if the company wants to bounce back to life, it will need to find a spark somewhere -- and this news isn't that spark.
How far can the shares fall? It appears that the $24 region may provide a bit of support, but that could easily disappear as investors react to this news. Pay attention to today's intraday chart in order to find potential support for AEP.
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