AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - Nasdaq - US0255371017 - Common Stock - Currency: USD
Overall AEP gets a fundamental rating of 3 out of 10. We evaluated AEP against 47 industry peers in the Electric Utilities industry. While AEP is still in line with the averages on profitability rating, there are concerns on its financial health. AEP is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
AEP had positive earnings in the past year.
In the past year AEP had a positive cash flow from operations.
In the past 5 years AEP has always been profitable.
AEP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a Return On Assets value of 2.65%, AEP is not doing good in the industry: 61.70% of the companies in the same industry are doing better.
With a Return On Equity value of 10.10%, AEP perfoms like the industry average, outperforming 53.19% of the companies in the same industry.
With a Return On Invested Capital value of 3.85%, AEP is not doing good in the industry: 61.70% of the companies in the same industry are doing better.
AEP had an Average Return On Invested Capital over the past 3 years of 3.55%. This is significantly below the industry average of 38.54%.
The 3 year average ROIC (3.55%) for AEP is below the current ROIC(3.85%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.65% | ||
| ROE | 10.1% | ||
| ROIC | 3.85% |
ROA(3y)2.54%
ROA(5y)2.64%
ROE(3y)9.79%
ROE(5y)10.22%
ROIC(3y)3.55%
ROIC(5y)3.47%
1.3 Margins
With a Profit Margin value of 13.71%, AEP perfoms like the industry average, outperforming 51.06% of the companies in the same industry.
AEP's Profit Margin has improved in the last couple of years.
The Operating Margin of AEP (22.61%) is better than 61.70% of its industry peers.
AEP's Operating Margin has improved in the last couple of years.
The Gross Margin of AEP (69.18%) is better than 65.96% of its industry peers.
In the last couple of years the Gross Margin of AEP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 22.61% | ||
| PM (TTM) | 13.71% | ||
| GM | 69.18% |
OM growth 3Y3.41%
OM growth 5Y5.01%
PM growth 3Y0.51%
PM growth 5Y4.04%
GM growth 3Y1.2%
GM growth 5Y-2.58%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so AEP is destroying value.
AEP has more shares outstanding than it did 1 year ago.
AEP has more shares outstanding than it did 5 years ago.
The debt/assets ratio for AEP has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 0.89, we must say that AEP is in the distress zone and has some risk of bankruptcy.
AEP has a Altman-Z score (0.89) which is comparable to the rest of the industry.
A Debt/Equity ratio of 1.54 is on the high side and indicates that AEP has dependencies on debt financing.
AEP's Debt to Equity ratio of 1.54 is in line compared to the rest of the industry. AEP outperforms 42.55% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.89 |
ROIC/WACC0.59
WACC6.56%
2.3 Liquidity
A Current Ratio of 0.42 indicates that AEP may have some problems paying its short term obligations.
AEP has a worse Current ratio (0.42) than 89.36% of its industry peers.
A Quick Ratio of 0.31 indicates that AEP may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.31, AEP is doing worse than 89.36% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.31 |
3. Growth
3.1 Past
AEP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.89%, which is quite good.
Measured over the past 5 years, AEP shows a small growth in Earnings Per Share. The EPS has been growing by 5.71% on average per year.
Looking at the last year, AEP shows a small growth in Revenue. The Revenue has grown by 4.35% in the last year.
AEP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.85% yearly.
EPS 1Y (TTM)8.89%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%21.26%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%8.71%
3.2 Future
Based on estimates for the next years, AEP will show a small growth in Earnings Per Share. The EPS will grow by 7.00% on average per year.
AEP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.09% yearly.
EPS Next Y5.56%
EPS Next 2Y6.44%
EPS Next 3Y6.85%
EPS Next 5Y7%
Revenue Next Year4.61%
Revenue Next 2Y4.14%
Revenue Next 3Y3.97%
Revenue Next 5Y4.09%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 18.67 indicates a rather expensive valuation of AEP.
AEP's Price/Earnings is on the same level as the industry average.
AEP is valuated rather cheaply when we compare the Price/Earnings ratio to 28.04, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 17.27, AEP is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AEP is on the same level as its industry peers.
AEP is valuated cheaply when we compare the Price/Forward Earnings ratio to 37.64, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.67 | ||
| Fwd PE | 17.27 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEP indicates a slightly more expensive valuation: AEP is more expensive than 65.96% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.62 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates AEP does not grow enough to justify the current Price/Earnings ratio.
PEG (NY)3.36
PEG (5Y)3.27
EPS Next 2Y6.44%
EPS Next 3Y6.85%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.41%, AEP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.69, AEP has a dividend in line with its industry peers.
AEP's Dividend Yield is a higher than the S&P500 average which is at 2.31.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.41% |
5.2 History
The dividend of AEP has a limited annual growth rate of 5.62%.
AEP has been paying a dividend for at least 10 years, so it has a reliable track record.
AEP has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.62%
Div Incr Years15
Div Non Decr Years20
5.3 Sustainability
AEP pays out 70.11% of its income as dividend. This is not a sustainable payout ratio.
AEP's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP70.11%
EPS Next 2Y6.44%
EPS Next 3Y6.85%
109.79
+0.82 (+0.75%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners85.86%
Inst Owner Change-0.19%
Ins Owners0.02%
Ins Owner Change13.73%
Market Cap58.63B
Analysts69.6
Price Target112.19 (2.19%)
Short Float %3.97%
Short Ratio7.4
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.41% |
Yearly Dividend3.6
Dividend Growth(5Y)5.62%
DP70.11%
Div Incr Years15
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.88%
Min EPS beat(2)-1.19%
Max EPS beat(2)8.95%
EPS beat(4)3
Avg EPS beat(4)2.45%
Min EPS beat(4)-1.19%
Max EPS beat(4)8.95%
EPS beat(8)5
Avg EPS beat(8)1.17%
EPS beat(12)7
Avg EPS beat(12)1.32%
EPS beat(16)10
Avg EPS beat(16)1.29%
Revenue beat(2)1
Avg Revenue beat(2)-0.29%
Min Revenue beat(2)-5.22%
Max Revenue beat(2)4.64%
Revenue beat(4)1
Avg Revenue beat(4)-1.63%
Min Revenue beat(4)-5.22%
Max Revenue beat(4)4.64%
Revenue beat(8)1
Avg Revenue beat(8)-3.52%
Revenue beat(12)4
Avg Revenue beat(12)2.99%
Revenue beat(16)7
Avg Revenue beat(16)2.96%
PT rev (1m)0.27%
PT rev (3m)2.79%
EPS NQ rev (1m)-0.51%
EPS NQ rev (3m)-4.63%
EPS NY rev (1m)-0.05%
EPS NY rev (3m)-0.32%
Revenue NQ rev (1m)-1.4%
Revenue NQ rev (3m)-4.19%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)-0.08%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.67 | ||
| Fwd PE | 17.27 | ||
| P/S | 2.91 | ||
| P/FCF | N/A | ||
| P/OCF | 8.61 | ||
| P/B | 2.14 | ||
| P/tB | 2.15 | ||
| EV/EBITDA | 12.62 |
EPS(TTM)5.88
EY5.36%
EPS(NY)6.36
Fwd EY5.79%
FCF(TTM)-2.43
FCFYN/A
OCF(TTM)12.76
OCFY11.62%
SpS37.75
BVpS51.25
TBVpS51.15
PEG (NY)3.36
PEG (5Y)3.27
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.65% | ||
| ROE | 10.1% | ||
| ROCE | 5.06% | ||
| ROIC | 3.85% | ||
| ROICexc | 3.87% | ||
| ROICexgc | 3.87% | ||
| OM | 22.61% | ||
| PM (TTM) | 13.71% | ||
| GM | 69.18% | ||
| FCFM | N/A |
ROA(3y)2.54%
ROA(5y)2.64%
ROE(3y)9.79%
ROE(5y)10.22%
ROIC(3y)3.55%
ROIC(5y)3.47%
ROICexc(3y)3.57%
ROICexc(5y)3.49%
ROICexgc(3y)3.58%
ROICexgc(5y)3.5%
ROCE(3y)4.66%
ROCE(5y)4.55%
ROICexcg growth 3Y2.86%
ROICexcg growth 5Y3.59%
ROICexc growth 3Y2.86%
ROICexc growth 5Y3.6%
OM growth 3Y3.41%
OM growth 5Y5.01%
PM growth 3Y0.51%
PM growth 5Y4.04%
GM growth 3Y1.2%
GM growth 5Y-2.58%
F-Score5
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.27 | ||
| Cap/Depr | 235.85% | ||
| Cap/Sales | 40.24% | ||
| Interest Coverage | 2.5 | ||
| Cash Conversion | 85.19% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.31 | ||
| Altman-Z | 0.89 |
F-Score5
WACC6.56%
ROIC/WACC0.59
Cap/Depr(3y)223.56%
Cap/Depr(5y)219.34%
Cap/Sales(3y)37.81%
Cap/Sales(5y)38.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)8.89%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%21.26%
EPS Next Y5.56%
EPS Next 2Y6.44%
EPS Next 3Y6.85%
EPS Next 5Y7%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%8.71%
Revenue Next Year4.61%
Revenue Next 2Y4.14%
Revenue Next 3Y3.97%
Revenue Next 5Y4.09%
EBIT growth 1Y11.43%
EBIT growth 3Y9.11%
EBIT growth 5Y10.1%
EBIT Next Year84.62%
EBIT Next 3Y30.03%
EBIT Next 5Y21.57%
FCF growth 1Y52.98%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y55.4%
OCF growth 3Y21.01%
OCF growth 5Y9.77%