AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - Nasdaq - US0255371017 - Common Stock - Currency: USD
We assign a fundamental rating of 3 out of 10 to AEP. AEP was compared to 47 industry peers in the Electric Utilities industry. AEP has a medium profitability rating, but doesn't score so well on its financial health evaluation. AEP is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year AEP was profitable.
In the past year AEP had a positive cash flow from operations.
Each year in the past 5 years AEP has been profitable.
In the past 5 years AEP always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of AEP (2.65%) is worse than 61.70% of its industry peers.
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.
The Average Return On Invested Capital over the past 3 years for AEP 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.
With a decent Gross Margin value of 69.18%, AEP is doing good in the industry, outperforming 65.96% of the companies in the same industry.
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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), 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.
Compared to 1 year ago, AEP has an improved debt to assets ratio.
2.2 Solvency
AEP has an Altman-Z score of 0.85. This is a bad value and indicates that AEP is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.85, AEP is in line with its industry, outperforming 51.06% of the companies in the same industry.
A Debt/Equity ratio of 1.54 is on the high side and indicates that AEP has dependencies on debt financing.
The Debt to Equity ratio of AEP (1.54) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.85 |
ROIC/WACC0.45
WACC8.56%
2.3 Liquidity
A Current Ratio of 0.42 indicates that AEP may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.42, AEP is doing worse than 89.36% of the companies in the same industry.
AEP has a Quick Ratio of 0.42. This is a bad value and indicates that AEP is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of AEP (0.31) is worse than 89.36% of its industry peers.
| 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.
The Earnings Per Share has been growing slightly by 5.71% on average over the past years.
Looking at the last year, AEP shows a small growth in Revenue. The Revenue has grown by 4.35% in the last year.
The Revenue has been growing slightly by 4.85% on average over the past years.
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
AEP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.69% yearly.
Based on estimates for the next years, AEP will show a small growth in Revenue. The Revenue will grow by 4.79% on average per year.
EPS Next Y5.65%
EPS Next 2Y6.39%
EPS Next 3Y6.72%
EPS Next 5Y6.69%
Revenue Next Year4.81%
Revenue Next 2Y4.14%
Revenue Next 3Y3.91%
Revenue Next 5Y4.79%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
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
With a Price/Earnings ratio of 17.14, AEP is valued on the expensive side.
AEP's Price/Earnings is on the same level as the industry average.
AEP's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 26.32.
The Price/Forward Earnings ratio is 15.87, which indicates a correct valuation of AEP.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AEP is on the same level as its industry peers.
When comparing the Price/Forward Earnings ratio of AEP to the average of the S&P500 Index (22.19), we can say AEP is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.14 | ||
| Fwd PE | 15.87 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AEP is valued a bit more expensive than the industry average as 63.83% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.08 |
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)3.04
PEG (5Y)3
EPS Next 2Y6.39%
EPS Next 3Y6.72%
5. Dividend
5.1 Amount
AEP has a Yearly Dividend Yield of 3.61%.
AEP's Dividend Yield is a higher than the industry average which is at 3.56.
AEP's Dividend Yield is rather good when compared to the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.61% |
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 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
70.11% of the earnings are spent on dividend by AEP. This is not a sustainable payout ratio.
AEP's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP70.11%
EPS Next 2Y6.39%
EPS Next 3Y6.72%
NASDAQ:AEP (6/18/2025, 10:33:05 AM)
100.8
-0.82 (-0.81%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners85.86%
Inst Owner Change8.91%
Ins Owners0.02%
Ins Owner Change6.45%
Market Cap53.83B
Analysts70.4
Price Target111.74 (10.85%)
Short Float %3.91%
Short Ratio6.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.61% |
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)2.17%
PT rev (3m)6.76%
EPS NQ rev (1m)-0.91%
EPS NQ rev (3m)-3.15%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.18%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.3%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)-0.06%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.14 | ||
| Fwd PE | 15.87 | ||
| P/S | 2.67 | ||
| P/FCF | N/A | ||
| P/OCF | 7.9 | ||
| P/B | 1.97 | ||
| P/tB | 1.97 | ||
| EV/EBITDA | 12.08 |
EPS(TTM)5.88
EY5.83%
EPS(NY)6.35
Fwd EY6.3%
FCF(TTM)-2.43
FCFYN/A
OCF(TTM)12.76
OCFY12.66%
SpS37.75
BVpS51.25
TBVpS51.15
PEG (NY)3.04
PEG (5Y)3
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 | 0.85 |
F-Score5
WACC8.56%
ROIC/WACC0.45
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 Y5.65%
EPS Next 2Y6.39%
EPS Next 3Y6.72%
EPS Next 5Y6.69%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%8.71%
Revenue Next Year4.81%
Revenue Next 2Y4.14%
Revenue Next 3Y3.91%
Revenue Next 5Y4.79%
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%