AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
USA - NASDAQ:AEP - US0255371017 - Common Stock
112.74 USD
+0.24 (+0.21%)
We assign a fundamental rating of 4 out of 10 to AEP. AEP was compared to 47 industry peers in the Electric Utilities industry. While AEP has a great profitability rating, there are quite some 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
In the past year AEP was profitable.
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
AEP has a Return On Assets of 3.39%. This is in the better half of the industry: AEP outperforms 68.09% of its industry peers.
AEP has a better Return On Equity (12.20%) than 68.09% 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 5.01%.
The last Return On Invested Capital (4.14%) for AEP is above the 3 year average (3.55%), which is a sign of increasing profitability.
| 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
With an excellent Profit Margin value of 17.66%, AEP belongs to the best of the industry, outperforming 85.11% of the companies in the same industry.
AEP's Profit Margin has improved in the last couple of years.
The Operating Margin of AEP (24.82%) is better than 68.09% of its industry peers.
In the last couple of years the Operating Margin of AEP has grown nicely.
AEP has a better Gross Margin (69.10%) than 61.70% of its industry peers.
AEP's Gross Margin has declined in the last couple of years.
| 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.
AEP has more shares outstanding than it did 1 year ago.
AEP has more shares outstanding than it did 5 years ago.
AEP has a better debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 0.95, we must say that AEP is in the distress zone and has some risk of bankruptcy.
AEP has a Altman-Z score (0.95) which is in line with its industry peers.
AEP has a Debt/Equity ratio of 1.43. This is a high value indicating a heavy dependency on external financing.
AEP has a Debt to Equity ratio of 1.43. This is comparable to the rest of the industry: AEP outperforms 48.94% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.43 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.95 |
ROIC/WACC0.64
WACC6.45%
2.3 Liquidity
A Current Ratio of 0.55 indicates that AEP may have some problems paying its short term obligations.
AEP has a worse Current ratio (0.55) than 85.11% of its industry peers.
AEP has a Quick 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.
With a Quick ratio value of 0.41, AEP is not doing good in the industry: 87.23% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.41 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 9.78% over the past year.
AEP shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.71% yearly.
AEP shows a small growth in Revenue. In the last year, the Revenue has grown by 5.85%.
The Revenue has been growing slightly by 4.85% on average over the past years.
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.
Based on estimates for the next years, AEP will show a small growth in Revenue. The Revenue will grow by 5.58% on average per year.
EPS Next Y6.14%
EPS Next 2Y6.46%
EPS Next 3Y6.94%
EPS Next 5Y7.03%
Revenue Next Year5.51%
Revenue Next 2Y4.57%
Revenue Next 3Y4.39%
Revenue Next 5Y5.58%
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 accelerating.
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
Based on the Price/Earnings ratio of 18.60, the valuation of AEP can be described as rather expensive.
The rest of the industry has a similar Price/Earnings ratio as AEP.
The average S&P500 Price/Earnings ratio is at 27.76. AEP is valued slightly cheaper when compared to this.
With a Price/Forward Earnings ratio of 17.73, 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.
The average S&P500 Price/Forward Earnings ratio is at 23.18. AEP is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.6 | ||
| Fwd PE | 17.73 |
4.2 Price Multiples
AEP's Enterprise Value to EBITDA ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.1 |
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)3.03
PEG (5Y)3.26
EPS Next 2Y6.46%
EPS Next 3Y6.94%
5. Dividend
5.1 Amount
AEP has a Yearly Dividend Yield of 3.42%. Purely for dividend investing, there may be better candidates out there.
AEP's Dividend Yield is comparable with the industry average which is at 3.80.
Compared to an average S&P500 Dividend Yield of 2.41, AEP pays a bit more dividend than the S&P500 average.
| 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 been paying a dividend for at least 10 years, so it has 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.
The dividend of AEP is growing, but earnings are growing more, so the dividend growth is sustainable.
DP53.93%
EPS Next 2Y6.46%
EPS Next 3Y6.94%
NASDAQ:AEP (10/1/2025, 12:37:01 PM)
112.74
+0.24 (+0.21%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners85.1%
Inst Owner Change-0.88%
Ins Owners0.02%
Ins Owner Change3.76%
Market Cap60.29B
Analysts70
Price Target116.84 (3.64%)
Short Float %4.42%
Short Ratio7.15
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)0.24%
PT rev (3m)4.43%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-3.34%
EPS NY rev (1m)-0.08%
EPS NY rev (3m)0.49%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.17%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)0.82%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.6 | ||
| Fwd PE | 17.73 | ||
| P/S | 2.92 | ||
| P/FCF | N/A | ||
| P/OCF | 9.18 | ||
| P/B | 2.01 | ||
| P/tB | 2.02 | ||
| EV/EBITDA | 12.1 |
EPS(TTM)6.06
EY5.38%
EPS(NY)6.36
Fwd EY5.64%
FCF(TTM)-3.51
FCFYN/A
OCF(TTM)12.29
OCFY10.9%
SpS38.64
BVpS55.95
TBVpS55.85
PEG (NY)3.03
PEG (5Y)3.26
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 | 0.95 |
F-Score6
WACC6.45%
ROIC/WACC0.64
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 Y6.14%
EPS Next 2Y6.46%
EPS Next 3Y6.94%
EPS Next 5Y7.03%
Revenue 1Y (TTM)5.85%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.09%
Revenue Next Year5.51%
Revenue Next 2Y4.57%
Revenue Next 3Y4.39%
Revenue Next 5Y5.58%
EBIT growth 1Y26.94%
EBIT growth 3Y9.11%
EBIT growth 5Y10.1%
EBIT Next Year85.93%
EBIT Next 3Y30.64%
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%