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American Electric Power (AEP)
NASDAQ:AEP
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American Electric Power
(NASDAQ:AEP)
Rating:74Outperform
Price Target:
$126.00
â–²(12.51% Upside)
Positive Factors
Financial Performance
AEP reported GAAP EPS of $1.50 and operating EPS of $1.54 compared to consensus/BofA estimates of $1.39.
Investment and Capital Plan
Management's confidence in rolling an incremental $10bn of transmission and generation investment into its capital plan.
Regulatory Impact
Positive impact of legislation and regulatory outcomes in Texas, Ohio, Oklahoma, and Kentucky.
Negative Factors
Legislative Challenges
Management’s view of pending Ohio legislation will be key given significant changes to the regulatory compact and a ~$0.07/sh on paper EPS headwind from foregone OVEC payments.
Sales Performance
1Q25 YoY weather normalized sales was again below plan (1.8% decline versus 2025e guidance for 0.7% residential sales growth).
American Electric Power (AEP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$60.36B
Dividend Yield3.32%
Average Volume (3M)3.23M
Price to Earnings (P/E)16.5
Beta (1Y)0.05
Revenue Growth5.84%
EPS Growth36.33%
CountryUS
Employees16,330
SectorUtilities
Sector Strength84
IndustryRegulated Electric
Share Statistics
EPS (TTM)1.43
Shares Outstanding534,794,740
10 Day Avg. Volume3,865,476
30 Day Avg. Volume3,230,189
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.70
Enterprise Value/Revenue4.92
Enterprise Value/Gross Profit14.80
Enterprise Value/Ebitda11.57
Forecast
1Y Price Target
$115.67Price Target Upside3.29% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
American Electric Power Business Overview & Revenue Model
Company DescriptionAmerican Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.
How the Company Makes MoneyAEP generates revenue primarily through the sale of electricity to residential, commercial, and industrial customers. The company's revenue model is based on regulated utility operations, where it earns returns on investments in infrastructure, such as power plants and transmission lines, as approved by state utility commissions. Key revenue streams include retail electricity sales, transmission services, and ancillary services. AEP also engages in wholesale electricity sales and has partnerships with independent power producers and renewable energy developers to diversify its energy portfolio and enhance revenue. Additionally, the company benefits from energy efficiency programs and demand response initiatives, which can provide supplemental revenue through incentive programs and cost savings for customers.
American Electric Power Key Performance Indicators (KPIs)
Any
Retail Electric
Measures performance in the retail electricity market, reflecting customer base size, pricing power, and market competitiveness.
Measures performance in the retail electricity market, reflecting customer base size, pricing power, and market competitiveness.
Data provided by:
Main Street Data
Main Street DataAmerican Electric Power Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: 3.38%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted AEP's strong financial performance, significant load growth, and successful regulatory and legislative outcomes, positioning the company for substantial future growth. However, challenges remain in regulatory recovery and potential tax credit uncertainties.Q2-2025 Updates
Positive Updates
Record-Breaking Operating Earnings
AEP delivered the strongest ever second quarter operating earnings in its 100-year history, with operating earnings of $1.43 per share or $766 million, representing a 14% increase year-over-year.
Increased Capital Investment Plan
The company announced an increase in its capital investment plan from $54 billion to a potential $70 billion over five years, driven by significant load growth opportunities.
Significant Load Growth
AEP is experiencing transformative load growth with 24 gigawatts of incremental load expected by the end of the decade, supported by signed customer agreements, and an additional 190 gigawatts of potential load in the interconnection queue.
Constructive Regulatory and Legislative Outcomes
Achievements include the approval of large load tariffs in multiple states, the acquisition of a natural gas facility in Oklahoma, and new legislative frameworks in Texas and Ohio that reduce regulatory lag and promote investment.
Strong Financial Position
AEP has a robust liquidity position with over $5.6 billion in liquidity and a stable credit outlook, with recent financing activities covering equity needs for its current capital plan.
Negative Updates
Regulatory Lag and Recovery Challenges
Despite legislative advancements, there are ongoing challenges in achieving timely regulatory approvals and recovering investments, particularly in states without new frameworks like the UTM in Texas.
Potential Tax Credit Eligibility Uncertainty
There is some uncertainty regarding the eligibility of certain renewable projects for tax credits due to potential changes in federal guidelines, which could lead to reallocating capital investments.
Company Guidance
During the American Electric Power (AEP) Second Quarter 2025 Earnings Call, key guidance included a significant increase in AEP's operating earnings, which reached $1.43 per share or $766 million, marking the strongest second quarter in the company's history. The guidance highlighted an upward revision to the 2025 operating earnings forecast, now targeting the upper half of the $5.75 to $5.95 per share range. AEP also reaffirmed a long-term operating earnings growth rate of 6% to 8%, supported by a robust $54 billion capital plan, expected to expand to a new 5-year capital plan of approximately $70 billion. This expanded capital allocation is anticipated to be divided into approximately 50% for transmission, 40% for generation, and 10% for distribution. The company reported transformative load growth, expecting 24 gigawatts of incremental load by the decade's end, up from a previously reported 21 gigawatts, driven by data centers and manufacturing reshoring. Significant regulatory and legislative achievements were also outlined, including tariff approvals in several states and legislative changes in Texas and Ohio to streamline investment recovery and reduce regulatory lag.American Electric Power Financial Statement Overview
Summary
American Electric Power demonstrates solid profitability and operational efficiency, with stable revenue growth and strong profit margins. However, the high leverage and negative free cash flow growth present potential risks. The company should focus on improving cash flow generation and managing debt levels to enhance financial stability.Income Statement
American Electric Power shows a stable revenue growth rate of 2.52% in the TTM, with strong gross and net profit margins at 47.23% and 17.86%, respectively. The EBIT and EBITDA margins are also healthy, indicating efficient operations. However, the revenue growth has been modest, and there is room for improvement in profitability metrics compared to industry leaders.75
Positive
Balance Sheet
The company's debt-to-equity ratio is high at 87.18, indicating significant leverage, which could pose risks if interest rates rise. However, the return on equity is strong at 18.25%, suggesting effective use of equity to generate profits. The equity ratio is moderate, reflecting a balanced asset structure.65
Positive
Cash Flow
The free cash flow growth rate is negative, indicating challenges in generating free cash flow. The operating cash flow to net income ratio is below 1, suggesting that not all net income is being converted into cash. The free cash flow to net income ratio is also low, highlighting potential cash flow management issues.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 20.92B | 19.92B | 19.38B | 19.31B | 16.62B | 14.91B |
| Gross Profit | 6.95B | 6.36B | 5.62B | 4.87B | 4.67B | 4.28B |
| EBITDA | 8.89B | 8.09B | 7.21B | 7.10B | 6.75B | 6.21B |
| Net Income | 3.65B | 2.97B | 2.21B | 2.31B | 2.49B | 2.20B |
Balance Sheet | ||||||
| Total Assets | 107.78B | 103.08B | 96.68B | 93.40B | 87.67B | 80.76B |
| Cash, Cash Equivalents and Short-Term Investments | 439.30M | 418.30M | 544.40M | 697.00M | 623.80M | 593.50M |
| Total Debt | 46.62B | 45.76B | 43.61B | 41.58B | 36.66B | 34.43B |
| Total Liabilities | 76.81B | 76.09B | 71.40B | 69.35B | 64.99B | 59.98B |
| Stockholders Equity | 29.87B | 26.94B | 25.25B | 23.89B | 22.43B | 20.55B |
Cash Flow | ||||||
| Free Cash Flow | 2.14B | 6.66B | -2.49B | -1.48B | -1.92B | -2.48B |
| Operating Cash Flow | 6.57B | 6.80B | 5.01B | 5.29B | 3.84B | 3.83B |
| Investing Cash Flow | -9.69B | -7.60B | -6.27B | -7.75B | -6.43B | -6.23B |
| Financing Cash Flow | 3.15B | 659.20M | 1.08B | 2.57B | 2.61B | 2.41B |
American Electric Power Technical Analysis
Positive
111.99
Price Trends
105.72
Positive
104.55
Positive
100.30
Positive
Market Momentum
2.12
Positive
65.40
Neutral
36.01
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AEP, the sentiment is Positive. The current price of 111.99 is above the 20-day moving average (MA) of 110.76, above the 50-day MA of 105.72, and above the 200-day MA of 100.30, indicating a bullish trend. The MACD of 2.12 indicates Positive momentum. The RSI at 65.40 is Neutral, neither overbought nor oversold. The STOCH value of 36.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AEP.
American Electric Power Risk Analysis
American Electric Power disclosed 46 risk factors in its most recent earnings report. American Electric Power reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Electric Power Peers Comparison
Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $45.10B | 16.95 | 9.87% | 3.54% | 4.46% | 8.68% | |
74 Outperform | $60.36B | 16.53 | 13.03% | 3.32% | 5.84% | 36.33% | |
72 Outperform | $52.21B | 21.14 | 9.29% | 4.37% | 7.60% | 55.99% | |
72 Outperform | $70.63B | 18.20 | 8.31% | 4.30% | -6.02% | 7.24% | |
71 Outperform | $103.61B | 24.32 | 12.89% | 3.08% | 8.53% | -7.53% | |
66 Neutral | $17.90B | 18.75 | 8.12% | 3.41% | 7.32% | 12.01% | |
66 Neutral | $96.63B | 20.32 | 9.60% | 3.43% | 4.07% | 9.94% |
* Utilities Sector Average
Performance Comparison
AEP
American Electric Power
111.99
18.49
19.78%
D
Dominion Energy
61.14
7.71
14.43%
DUK
Duke Energy
122.45
14.16
13.08%
EXC
Exelon
44.58
8.34
23.01%
NGG
National Grid Transco
71.43
9.81
15.92%
SO
Southern Co
94.07
9.57
11.33%
American Electric Power Corporate Events
Executive/Board Changes
Sara Martinez Tucker Resigns as AEP Chair
Neutral
Jul 23, 2025
On July 22, 2025, Sara Martinez Tucker announced her resignation as Chair of the Board of American Electric Power Company, effective July 31, 2025, citing personal reasons and no disagreements with the company. She will continue as an independent Lead Director, while William J. Fehrman, the current CEO and President, will assume the role of Chair effective August 1, 2025, marking a significant leadership transition for the company.
The most recent analyst rating on (AEP) stock is a Buy with a $111.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.
Executive/Board Changes
American Electric Power Announces Executive Leadership Change
Neutral
Jun 17, 2025
On June 17, 2025, American Electric Power (AEP) announced that David Feinberg will step down from his role as executive vice president and general counsel, effective July 13, 2025. He will transition to the position of senior advisor to the CEO from July 14, 2025, until his departure on August 15, 2025, marking the end of his employment with AEP.
The most recent analyst rating on (AEP) stock is a Buy with a $111.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.
Private Placements and FinancingBusiness Operations and Strategy
American Electric Power Finalizes $2.82 Billion Partnership
Positive
Jun 9, 2025
On June 5, 2025, American Electric Power (AEP) finalized a strategic partnership with KKR and PSP Investments, resulting in a $2.82 billion investment for a 19.9% equity interest in AEP’s Ohio and Indiana Michigan transmission companies. This transaction, initially announced in January 2025, supports AEP’s five-year, $54 billion capital plan and is expected to facilitate infrastructure development to meet the growing energy demand in its service territories. The partnership underscores AEP’s leadership in the transmission sector and aims to enhance grid reliability and service to its customers.
The most recent analyst rating on (AEP) stock is a Buy with a $111.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.