AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - Nasdaq - US0255371017 - Common Stock - Currency: USD
AEP gets a fundamental rating of 3 out of 10. The analysis compared the fundamentals against 47 industry peers in the Electric Utilities industry. There are concerns on the financial health of AEP while its profitability can be described as average. While showing a medium growth rate, AEP is valued expensive at the moment.
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
Looking at the Return On Assets, with a value of 2.65%, AEP is doing worse than 61.70% of the companies in the same industry.
AEP has a Return On Equity (10.10%) which is comparable to the rest of the industry.
AEP has a worse Return On Invested Capital (3.85%) than 61.70% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AEP is significantly below the industry average of 38.54%.
The last Return On Invested Capital (3.85%) for AEP is above the 3 year average (3.55%), which is a sign of increasing profitability.
| 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
AEP has a Profit Margin (13.71%) which is in line with its industry peers.
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.
In the last couple of years the Operating Margin of AEP has grown nicely.
AEP has a better Gross Margin (69.18%) 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.
Compared to 1 year ago, AEP has more shares outstanding
AEP has more shares outstanding than it did 5 years ago.
AEP has a better debt/assets ratio than last year.
2.2 Solvency
AEP has an Altman-Z score of 0.88. This is a bad value and indicates that AEP is not financially healthy and even has some risk of bankruptcy.
AEP's Altman-Z score of 0.88 is in line compared to the rest of the industry. AEP outperforms 51.06% of its industry peers.
AEP has a Debt/Equity ratio of 1.54. This is a high value indicating a heavy dependency on external 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 | 0.88 |
ROIC/WACC0.59
WACC6.55%
2.3 Liquidity
AEP has a Current 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.
AEP's Current ratio of 0.42 is on the low side compared to the rest of the industry. AEP is outperformed by 89.36% of its industry peers.
A Quick Ratio of 0.31 indicates that AEP may have some problems paying its short term obligations.
AEP's Quick ratio of 0.31 is on the low side compared to the rest of the industry. AEP is outperformed by 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.
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.
AEP shows a small growth in Revenue. In the last year, the Revenue has grown by 4.35%.
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 7.00% yearly.
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
AEP is valuated rather expensively with a Price/Earnings ratio of 18.53.
Compared to the rest of the industry, the Price/Earnings ratio of AEP is on the same level as its industry peers.
When comparing the Price/Earnings ratio of AEP to the average of the S&P500 Index (27.35), we can say AEP is valued slightly cheaper.
AEP is valuated rather expensively with a Price/Forward Earnings ratio of 17.15.
AEP's Price/Forward Earnings ratio is in line with the industry average.
AEP is valuated cheaply when we compare the Price/Forward Earnings ratio to 37.54, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.53 | ||
| Fwd PE | 17.15 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AEP is valued a bit more expensive than 63.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.57 |
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)3.33
PEG (5Y)3.25
EPS Next 2Y6.44%
EPS Next 3Y6.85%
5. Dividend
5.1 Amount
AEP has a Yearly Dividend Yield of 3.51%.
AEP's Dividend Yield is comparable with the industry average which is at 3.54.
Compared to an average S&P500 Dividend Yield of 2.36, AEP pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.51% |
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
70.11% of the earnings are spent on dividend by AEP. This is not a sustainable payout ratio.
The dividend of AEP is growing, but earnings are growing more, so the dividend growth is sustainable.
DP70.11%
EPS Next 2Y6.44%
EPS Next 3Y6.85%
108.97
+0.08 (+0.07%)
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 Cap58.19B
Analysts69.6
Price Target112.19 (2.95%)
Short Float %3.97%
Short Ratio7.4
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.51% |
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)0.4%
PT rev (3m)4.89%
EPS NQ rev (1m)-0.73%
EPS NQ rev (3m)-4.83%
EPS NY rev (1m)-0.05%
EPS NY rev (3m)-0.32%
Revenue NQ rev (1m)-2.37%
Revenue NQ rev (3m)-5.14%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)-0.07%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.53 | ||
| Fwd PE | 17.15 | ||
| P/S | 2.89 | ||
| P/FCF | N/A | ||
| P/OCF | 8.54 | ||
| P/B | 2.13 | ||
| P/tB | 2.13 | ||
| EV/EBITDA | 12.57 |
EPS(TTM)5.88
EY5.4%
EPS(NY)6.36
Fwd EY5.83%
FCF(TTM)-2.43
FCFYN/A
OCF(TTM)12.76
OCFY11.71%
SpS37.75
BVpS51.25
TBVpS51.15
PEG (NY)3.33
PEG (5Y)3.25
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 | 0.88 |
F-Score5
WACC6.55%
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%