AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - Nasdaq - US0255371017 - Common Stock - Currency: USD
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 scores excellent on profitability, 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
In the past year AEP was profitable.
In the past year AEP had a positive cash flow from operations.
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
The Return On Assets of AEP (3.39%) is better than 65.96% of its industry peers.
AEP's Return On Equity of 12.20% is fine compared to the rest of the industry. AEP outperforms 70.21% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.14%, AEP is in line with its industry, outperforming 46.81% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for AEP is in line with the industry average of 5.09%.
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's Profit Margin of 17.66% is amongst the best of the industry. AEP outperforms 85.11% of its industry peers.
AEP's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 24.82%, AEP is in the better half of the industry, outperforming 65.96% of the companies in the same industry.
AEP's Operating Margin has improved in the last couple of years.
AEP's Gross Margin of 69.10% is fine compared to the rest of the industry. AEP outperforms 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.
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.
Compared to 1 year ago, AEP has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.94, we must say that AEP is in the distress zone and has some risk of bankruptcy.
With a Altman-Z score value of 0.94, AEP perfoms like the industry average, outperforming 55.32% of the companies in the same 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 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 | 0.94 |
ROIC/WACC0.63
WACC6.56%
2.3 Liquidity
A Current Ratio of 0.55 indicates that AEP may have some problems paying its short term obligations.
AEP's Current ratio of 0.55 is on the low side compared to the rest of the industry. AEP is outperformed by 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.
The Quick ratio of AEP (0.41) is worse than 85.11% 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.
The Earnings Per Share has been growing slightly by 5.71% on average over the past years.
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 7.22% yearly.
The Revenue is expected to grow by 4.17% on average over the next years.
EPS Next Y5.56%
EPS Next 2Y6.44%
EPS Next 3Y6.85%
EPS Next 5Y7.22%
Revenue Next Year4.83%
Revenue Next 2Y4.19%
Revenue Next 3Y4%
Revenue Next 5Y4.17%
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
The Price/Earnings ratio is 18.59, which indicates a rather expensive current valuation of AEP.
AEP's Price/Earnings ratio is in line with the industry average.
AEP is valuated rather cheaply when we compare the Price/Earnings ratio to 26.85, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 17.73, the valuation of AEP can be described as rather expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AEP is on the same level as its industry peers.
AEP's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 34.98.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.59 | ||
| 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 | 11.97 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
AEP has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.34
PEG (5Y)3.26
EPS Next 2Y6.44%
EPS Next 3Y6.85%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.30%, AEP has a reasonable but not impressive dividend return.
AEP's Dividend Yield is comparable with the industry average which is at 3.46.
AEP's Dividend Yield is a higher than the S&P500 average which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.3% |
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
53.93% of the earnings are spent on dividend by AEP. 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 2Y6.44%
EPS Next 3Y6.85%
112.66
+1.96 (+1.77%)
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 Change12.28%
Market Cap60.16B
Analysts69.6
Price Target116.13 (3.08%)
Short Float %4.14%
Short Ratio7.17
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.3% |
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)3.8%
PT rev (3m)6.18%
EPS NQ rev (1m)-2.99%
EPS NQ rev (3m)1.17%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.08%
Revenue NQ rev (1m)-2.68%
Revenue NQ rev (3m)-0.34%
Revenue NY rev (1m)0.21%
Revenue NY rev (3m)0.03%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.59 | ||
| Fwd PE | 17.73 | ||
| P/S | 2.91 | ||
| P/FCF | N/A | ||
| P/OCF | 9.16 | ||
| P/B | 2.01 | ||
| P/tB | 2.01 | ||
| EV/EBITDA | 11.97 |
EPS(TTM)6.06
EY5.38%
EPS(NY)6.36
Fwd EY5.64%
FCF(TTM)-3.52
FCFYN/A
OCF(TTM)12.31
OCFY10.92%
SpS38.7
BVpS56.03
TBVpS55.94
PEG (NY)3.34
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 | 0.94 |
F-Score6
WACC6.56%
ROIC/WACC0.63
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 Y5.56%
EPS Next 2Y6.44%
EPS Next 3Y6.85%
EPS Next 5Y7.22%
Revenue 1Y (TTM)5.85%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.09%
Revenue Next Year4.83%
Revenue Next 2Y4.19%
Revenue Next 3Y4%
Revenue Next 5Y4.17%
EBIT growth 1Y26.94%
EBIT growth 3Y9.11%
EBIT growth 5Y10.1%
EBIT Next Year85.62%
EBIT Next 3Y30.54%
EBIT Next 5Y24.7%
FCF growth 1Y46.54%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y57.25%
OCF growth 3Y21.01%
OCF growth 5Y9.77%