AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - US0255371017 - Common Stock
108.335 USD
-0.03 (-0.02%)
109.032 USD
+0.7 (+0.64%)
Taking everything into account, AEP scores 4 out of 10 in our fundamental rating. AEP was compared to 47 industry peers in the Electric Utilities industry. AEP has an excellent profitability rating, but there are concerns on its financial health. AEP is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
AEP had positive earnings in the past year.
AEP had a positive operating cash flow in the past year.
Each year in the past 5 years AEP has been profitable.
Each year in the past 5 years AEP had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 3.39%, AEP is in the better half of the industry, outperforming 68.09% of the companies in the same industry.
AEP has a better Return On Equity (12.20%) than 70.21% of its industry peers.
AEP has a Return On Invested Capital (4.14%) which is in line with its industry peers.
The Average Return On Invested Capital over the past 3 years for AEP is in line with the industry average of 5.06%.
The 3 year average ROIC (3.55%) for AEP is below the current ROIC(4.14%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.39% | ||
| ROE | 12.2% | ||
| ROIC | 4.14% |
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
AEP has a better Profit Margin (17.66%) than 85.11% of its industry peers.
AEP's Profit Margin has improved in the last couple of years.
The Operating Margin of AEP (24.82%) is better than 65.96% of its industry peers.
In the last couple of years the Operating Margin of AEP has grown nicely.
AEP has a Gross Margin of 69.10%. This is in the better half of the industry: AEP outperforms 61.70% of its industry peers.
In the last couple of years the Gross Margin of AEP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 24.82% | ||
| PM (TTM) | 17.66% | ||
| GM | 69.1% |
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AEP is destroying value.
The number of shares outstanding for AEP has been increased compared to 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 0.93, we must say that AEP is in the distress zone and has some risk of bankruptcy.
AEP has a Altman-Z score (0.93) which is comparable to the rest of the industry.
A Debt/Equity ratio of 1.43 is on the high side and indicates that AEP has dependencies on debt financing.
AEP has a Debt to Equity ratio (1.43) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.43 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.93 |
ROIC/WACC0.65
WACC6.36%
2.3 Liquidity
AEP has a Current Ratio of 0.55. This is a bad value and indicates that AEP is not financially healthy enough and could expect problems in meeting its short term obligations.
AEP has a worse Current ratio (0.55) than 85.11% of its industry peers.
A Quick Ratio of 0.41 indicates that AEP may have some problems paying its short term obligations.
AEP's Quick ratio of 0.41 is on the low side compared to the rest of the industry. AEP is outperformed by 87.23% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.41 |
3. Growth
3.1 Past
AEP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.78%, 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.
The Revenue has been growing slightly by 5.85% in the past year.
Measured over the past years, AEP shows a small growth in Revenue. The Revenue has been growing by 4.85% on average per year.
EPS 1Y (TTM)9.78%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%14.4%
Revenue 1Y (TTM)5.85%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.09%
3.2 Future
AEP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.03% yearly.
AEP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.58% yearly.
EPS Next Y6.22%
EPS Next 2Y6.6%
EPS Next 3Y7.05%
EPS Next 5Y7.03%
Revenue Next Year5.47%
Revenue Next 2Y4.53%
Revenue Next 3Y4.35%
Revenue Next 5Y5.58%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
AEP is valuated rather expensively with a Price/Earnings ratio of 17.88.
Compared to the rest of the industry, the Price/Earnings ratio of AEP is on the same level as its industry peers.
AEP is valuated rather cheaply when we compare the Price/Earnings ratio to 27.03, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 17.00, AEP is valued correctly.
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 rather cheaply when we compare the Price/Forward Earnings ratio to 22.54, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.88 | ||
| Fwd PE | 17 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEP is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 11.84 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of AEP may justify a higher PE ratio.
PEG (NY)2.87
PEG (5Y)3.13
EPS Next 2Y6.6%
EPS Next 3Y7.05%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.42%, AEP has a reasonable but not impressive dividend return.
AEP's Dividend Yield is comparable with the industry average which is at 4.09.
AEP's Dividend Yield is a higher than the S&P500 average which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.42% |
5.2 History
The dividend of AEP has a limited annual growth rate of 5.62%.
AEP has paid a dividend for at least 10 years, which is a reliable track record.
AEP has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)5.62%
Div Incr Years15
Div Non Decr Years20
5.3 Sustainability
AEP pays out 53.93% of its income as dividend. This is a bit on the high side, but may be sustainable.
AEP's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP53.93%
EPS Next 2Y6.6%
EPS Next 3Y7.05%
108.335
-0.03 (-0.02%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners86.35%
Inst Owner Change-0.87%
Ins Owners0.03%
Ins Owner Change4.32%
Market Cap57.94B
Analysts70
Price Target116.56 (7.59%)
Short Float %4.17%
Short Ratio6.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.42% |
Yearly Dividend3.6
Dividend Growth(5Y)5.62%
DP53.93%
Div Incr Years15
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)10.1%
Min EPS beat(2)8.95%
Max EPS beat(2)11.24%
EPS beat(4)3
Avg EPS beat(4)5.16%
Min EPS beat(4)-1.19%
Max EPS beat(4)11.24%
EPS beat(8)6
Avg EPS beat(8)2.64%
EPS beat(12)8
Avg EPS beat(12)2.26%
EPS beat(16)10
Avg EPS beat(16)1.83%
Revenue beat(2)2
Avg Revenue beat(2)3.06%
Min Revenue beat(2)1.47%
Max Revenue beat(2)4.64%
Revenue beat(4)2
Avg Revenue beat(4)-0.18%
Min Revenue beat(4)-5.22%
Max Revenue beat(4)4.64%
Revenue beat(8)2
Avg Revenue beat(8)-2.35%
Revenue beat(12)4
Avg Revenue beat(12)2.05%
Revenue beat(16)8
Avg Revenue beat(16)3.21%
PT rev (1m)0.37%
PT rev (3m)4.31%
EPS NQ rev (1m)-0.23%
EPS NQ rev (3m)0.71%
EPS NY rev (1m)0.62%
EPS NY rev (3m)0.54%
Revenue NQ rev (1m)1.06%
Revenue NQ rev (3m)2.99%
Revenue NY rev (1m)0.61%
Revenue NY rev (3m)0.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.88 | ||
| Fwd PE | 17 | ||
| P/S | 2.8 | ||
| P/FCF | N/A | ||
| P/OCF | 8.82 | ||
| P/B | 1.94 | ||
| P/tB | 1.94 | ||
| EV/EBITDA | 11.84 |
EPS(TTM)6.06
EY5.59%
EPS(NY)6.37
Fwd EY5.88%
FCF(TTM)-3.51
FCFYN/A
OCF(TTM)12.29
OCFY11.34%
SpS38.64
BVpS55.95
TBVpS55.85
PEG (NY)2.87
PEG (5Y)3.13
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.39% | ||
| ROE | 12.2% | ||
| ROCE | 5.33% | ||
| ROIC | 4.14% | ||
| ROICexc | 4.16% | ||
| ROICexgc | 4.16% | ||
| OM | 24.82% | ||
| PM (TTM) | 17.66% | ||
| GM | 69.1% | ||
| 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-Score6
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.43 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 4.98 | ||
| Cap/Depr | 243.45% | ||
| Cap/Sales | 40.88% | ||
| Interest Coverage | 2.7 | ||
| Cash Conversion | 76.4% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.41 | ||
| Altman-Z | 0.93 |
F-Score6
WACC6.36%
ROIC/WACC0.65
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)9.78%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%14.4%
EPS Next Y6.22%
EPS Next 2Y6.6%
EPS Next 3Y7.05%
EPS Next 5Y7.03%
Revenue 1Y (TTM)5.85%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.09%
Revenue Next Year5.47%
Revenue Next 2Y4.53%
Revenue Next 3Y4.35%
Revenue Next 5Y5.58%
EBIT growth 1Y26.94%
EBIT growth 3Y9.11%
EBIT growth 5Y10.1%
EBIT Next Year85.62%
EBIT Next 3Y30.54%
EBIT Next 5Y23.31%
FCF growth 1Y46.54%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y57.25%
OCF growth 3Y21.01%
OCF growth 5Y9.77%