AMERICAN ELECTRIC POWER (AEP)
US0255371017 - Common Stock
Taking everything into account, AEP scores 3 out of 10 in our fundamental rating. AEP was compared to 45 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. While showing a medium growth rate, AEP is valued expensive at the moment. Finally AEP also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
In the past year AEP was profitable.
AEP had a positive operating cash flow in the past year.
AEP had positive earnings in each of the past 5 years.
In the past 5 years AEP always reported a positive cash flow from operatings.
1.2 Ratios
AEP has a Return On Assets of 2.28%. This is comparable to the rest of the industry: AEP outperforms 44.44% of its industry peers.
With a Return On Equity value of 8.73%, AEP perfoms like the industry average, outperforming 48.89% of the companies in the same industry.
The Return On Invested Capital of AEP (3.36%) is worse than 66.67% of its industry peers.
The Average Return On Invested Capital over the past 3 years for AEP is in line with the industry average of 4.58%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.28% | ||
| ROE | 8.73% | ||
| ROIC | 3.36% |
ROA(3y)2.53%
ROA(5y)2.57%
ROE(3y)9.81%
ROE(5y)9.98%
ROIC(3y)3.45%
ROIC(5y)3.35%
1.3 Margins
AEP has a Profit Margin (11.63%) which is comparable to the rest of the industry.
In the last couple of years the Profit Margin of AEP has remained more or less at the same level.
AEP's Operating Margin of 19.67% is in line compared to the rest of the industry. AEP outperforms 55.56% of its industry peers.
In the last couple of years the Operating Margin of AEP has grown nicely.
AEP has a Gross Margin of 65.35%. This is comparable to the rest of the industry: AEP outperforms 57.78% of its industry peers.
In the last couple of years the Gross Margin of AEP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.67% | ||
| PM (TTM) | 11.63% | ||
| GM | 65.35% |
OM growth 3Y-0.59%
OM growth 5Y2.96%
PM growth 3Y-7.6%
PM growth 5Y-0.42%
GM growth 3Y-6.66%
GM growth 5Y-3.69%
2. Health
2.1 Basic Checks
AEP has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, AEP has more shares outstanding
The number of shares outstanding for AEP has been increased compared to 5 years ago.
AEP has a worse debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 0.79, we must say that AEP is in the distress zone and has some risk of bankruptcy.
AEP has a Altman-Z score (0.79) which is in line with its industry peers.
A Debt/Equity ratio of 1.60 is on the high side and indicates that AEP has dependencies on debt financing.
AEP's Debt to Equity ratio of 1.60 is on the low side compared to the rest of the industry. AEP is outperformed by 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.6 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.79 |
ROIC/WACC0.54
WACC6.25%
2.3 Liquidity
AEP has a Current Ratio of 0.53. 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 Current ratio of AEP (0.53) is worse than 88.89% of its industry peers.
AEP has a Quick Ratio of 0.53. 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 Quick ratio of 0.36. This is amonst the worse of the industry: AEP underperforms 86.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.53 | ||
| Quick Ratio | 0.36 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.95% over the past year.
The Earnings Per Share has been growing slightly by 5.81% on average over the past years.
AEP shows a decrease in Revenue. In the last year, the revenue decreased by -3.34%.
AEP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.23% yearly.
EPS 1Y (TTM)2.95%
EPS 3Y5.68%
EPS 5Y5.81%
EPS growth Q2Q17.14%
Revenue 1Y (TTM)-3.34%
Revenue growth 3Y8.36%
Revenue growth 5Y3.23%
Revenue growth Q2Q-6.22%
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 6.63% on average per year.
Based on estimates for the next years, AEP will show a small growth in Revenue. The Revenue will grow by 4.16% on average per year.
EPS Next Y7.86%
EPS Next 2Y7.2%
EPS Next 3Y6.88%
EPS Next 5Y6.63%
Revenue Next Year3.01%
Revenue Next 2Y3.31%
Revenue Next 3Y3.38%
Revenue Next 5Y4.16%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 15.50, the valuation of AEP can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of AEP is on the same level as its industry peers.
AEP's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.83.
AEP is valuated correctly with a Price/Forward Earnings ratio of 14.37.
The rest of the industry has a similar Price/Forward Earnings ratio as AEP.
The average S&P500 Price/Forward Earnings ratio is at 21.32. AEP is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.5 | ||
| Fwd PE | 14.37 |
4.2 Price Multiples
AEP's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. AEP is more expensive than 64.44% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 11.74 |
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)1.97
PEG (5Y)2.67
EPS Next 2Y7.2%
EPS Next 3Y6.88%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 4.25%, AEP is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 5.35, AEP has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.39, AEP pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.25% |
5.2 History
The dividend of AEP has a limited annual growth rate of 5.83%.
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)5.83%
Div Incr Years14
Div Non Decr Years19
5.3 Sustainability
79.72% of the earnings are spent on dividend by AEP. This is not a sustainable payout ratio.
The dividend of AEP is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP79.72%
EPS Next 2Y7.2%
EPS Next 3Y6.88%
AMERICAN ELECTRIC POWER
NASDAQ:AEP (4/17/2024, 7:00:00 PM)
After market: 81.27 +0.03 (+0.04%)81.24
+1.73 (+2.18%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap42.78B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.25% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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EPS NQ rev (1m)
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EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.5 | ||
| Fwd PE | 14.37 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.97
PEG (5Y)2.67
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.28% | ||
| ROE | 8.73% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 19.67% | ||
| PM (TTM) | 11.63% | ||
| GM | 65.35% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.2
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.6 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.53 | ||
| Quick Ratio | 0.36 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)2.95%
EPS 3Y5.68%
EPS 5Y
EPS growth Q2Q
EPS Next Y7.86%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-3.34%
Revenue growth 3Y8.36%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y