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American Electric Power Company, Inc. (AEP)
:AEP
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American Electric Power
(NASDAQ:AEP)
Rating:69Neutral
Price Target:―
Positive Factors
Earnings
AEP reported operating EPS of $1.54, which exceeded consensus estimates of $1.39, indicating strong financial performance.
Financial Outlook
The reaffirmation of AEP's full-year guidance and long-term EPS growth targets demonstrates confidence in the company's future performance.
Negative Factors
Regulatory Challenges
Pending Ohio legislation poses a risk, as significant changes to the regulatory compact could lead to an EPS headwind from foregone OVEC payments.
Sales Performance
Weather normalized sales showed a decline of 1.8%, which is below the company's guidance for residential sales growth, potentially signaling weaker demand.
American Electric Power (AEP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$55.41B
Dividend Yield3.49%
Average Volume (3M)3.40M
Price to Earnings (P/E)20.0
Beta (1Y)0.11
Revenue Growth4.20%
EPS Growth-3.64%
CountryUS
Employees16,330
SectorUtilities
Sector Strength80
IndustryRegulated Electric
Share Statistics
EPS (TTM)1.54
Shares Outstanding534,195,000
10 Day Avg. Volume3,718,018
30 Day Avg. Volume3,401,015
Financial Highlights & Ratios
PEG Ratio1.53
Price to Book (P/B)2.06
Price to Sales (P/S)0.00
P/FCF Ratio-57.87
Enterprise Value/Market Cap1.83
Enterprise Value/Revenue1.30
Enterprise Value/Gross Profit8.14
Enterprise Value/Ebitda3.28
Forecast
1Y Price Target
$110.75Price Target Upside7.60% 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 through several key streams. Primarily, the company earns money by selling electricity to residential, commercial, and industrial customers within its service territories. Revenue is largely driven by the regulated rates approved by state utility commissions. Additionally, AEP generates income through transmission and distribution services, which involve delivering electricity from power plants to end-users via its extensive network of power lines and substations. The company also engages in wholesale electricity markets, selling surplus power to other utilities or energy marketers. Furthermore, AEP invests in renewable energy projects and energy efficiency solutions, which contribute to its revenue through government incentives and customer programs. Strategic partnerships and joint ventures in energy infrastructure development also play a role in enhancing AEP's earnings.
American Electric Power Key Performance Indicators (KPIs)
Any
Retail Electric
Measures performance in the retail electricity market, highlighting customer base size, pricing strategies, and market competitiveness, which are crucial for revenue stability and growth.
Measures performance in the retail electricity market, highlighting customer base size, pricing strategies, and market competitiveness, which are crucial for revenue stability and growth.
Data provided by:
Main Street Data
Main Street DataAmerican Electric Power Financial Statement Overview
Summary
AEP demonstrates a solid financial performance with strong revenue growth and profitability from the income statement, a balanced leverage level from the balance sheet, and promising cash flow improvements. Opportunities exist to boost equity financing and sustain positive cash flows.Income Statement
American Electric Power has shown a strong income statement performance with a consistent growth in total revenue over the years. The gross profit margin is robust, reflecting efficient cost management. The net profit margin is healthy, indicating profitability. The EBIT and EBITDA margins are solid, demonstrating effective operational performance. The revenue growth rate from 2023 to 2024 is positive, further underscoring the company's ability to enhance its top line.75
Positive
Balance Sheet
The balance sheet reveals a moderate debt-to-equity ratio, suggesting a balanced approach to leveraging. However, the equity ratio is relatively low, indicating a higher reliance on liabilities to finance assets. The return on equity is decent, showing the company's ability to generate returns on shareholders' investments. The overall stability of the balance sheet is acceptable, but there is room for improvement in equity financing.60
Neutral
Cash Flow
Cash flow analysis highlights a significant improvement in free cash flow in 2024, indicating enhanced cash generation capabilities. The operating cash flow to net income ratio is strong, pointing to effective conversion of income into cash. Despite past negative free cash flow figures, the recent turnaround is a positive sign. The free cash flow to net income ratio has improved, showcasing better cash management practices.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 19.72B | 18.98B | 19.64B | 16.79B | 14.92B | Gross Profit |
| 12.46B | 11.13B | 11.29B | 10.20B | 9.54B | EBIT |
| 4.30B | 3.56B | 3.48B | 3.41B | 2.99B | EBITDA |
| 8.10B | 7.20B | 7.10B | 6.76B | 6.22B | Net Income Common Stockholders |
| 2.97B | 2.21B | 2.31B | 2.49B | 2.20B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 418.30M | 544.40M | 696.90M | 623.80M | 593.50M | Total Assets |
| 105.73B | 96.68B | 93.47B | 87.67B | 80.76B | Total Debt |
| 45.76B | 43.61B | 40.40B | 36.66B | 34.43B | Net Debt |
| 45.56B | 43.28B | 39.89B | 36.26B | 34.04B | Total Liabilities |
| 76.09B | 71.40B | 69.35B | 64.99B | 59.98B | Stockholders Equity |
| 26.94B | 25.25B | 23.89B | 22.43B | 20.55B |
| Cash Flow | Free Cash Flow | |||
| 6.66B | -2.49B | -1.48B | -1.92B | -2.48B | Operating Cash Flow |
| 6.80B | 5.01B | 5.29B | 3.84B | 3.83B | Investing Cash Flow |
| -7.60B | -6.27B | -7.75B | -6.43B | -6.23B | Financing Cash Flow |
| 659.20M | 1.08B | 2.57B | 2.61B | 2.41B |
American Electric Power Technical Analysis
Neutral
102.93
Price Trends
104.49
Negative
101.28
Positive
98.62
Positive
Market Momentum
-0.67
Positive
46.67
Neutral
65.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AEP, the sentiment is Neutral. The current price of 102.93 is below the 20-day moving average (MA) of 104.43, below the 50-day MA of 104.49, and above the 200-day MA of 98.62, indicating a neutral trend. The MACD of -0.67 indicates Positive momentum. The RSI at 46.67 is Neutral, neither overbought nor oversold. The STOCH value of 65.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AEP.
American Electric Power Risk Analysis
American Electric Power disclosed 45 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 1 New Risks
1.
The occurrence of one or more wildfires could cause tremendous loss, impact the market value and credit ratings of our securities and have a material adverse effect on our financial condition. (Applies to all Registrants) Q4, 2024
American Electric Power Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $47.93B | 21.09 | 8.22% | 4.75% | 3.62% | 40.33% | |
74 Outperform | $44.81B | 16.47 | 10.10% | 3.48% | 6.71% | 16.09% | |
73 Outperform | $70.32B | 18.42 | 8.31% | 4.74% | -3.25% | -76.46% | |
71 Outperform | $91.18B | 19.57 | 9.48% | 3.55% | 5.02% | 45.08% | |
69 Neutral | $55.41B | 20.01 | 10.41% | 3.49% | 4.20% | -3.64% | |
67 Neutral | $98.34B | 21.45 | 14.01% | 3.22% | 9.58% | 8.02% | |
63 Neutral | $8.57B | 10.13 | 4.66% | 4.38% | 3.79% | -12.91% |
* Utilities Sector Average
Performance Comparison
AEP
American Electric Power
102.93
14.77
16.75%
D
Dominion Energy
56.53
5.52
10.82%
DUK
Duke Energy
116.44
16.76
16.81%
EXC
Exelon
44.19
7.72
21.17%
NGG
National Grid Transco
73.57
9.82
15.40%
SO
Southern Co
89.66
13.55
17.80%
American Electric Power Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: -3.34%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and significant growth opportunities, particularly in commercial and industrial segments. AEP has secured regulatory and legislative successes that bolster its long-term strategy. While there are some challenges, such as the decline in residential load and the impact of legislative changes on OVEC cost recovery, the overall outlook remains positive due to robust growth and strategic investments.Q1-2025 Updates
Positive Updates
Strong First Quarter Financial Performance
American Electric Power announced first quarter 2025 operating earnings of $1.54 per share or $823 million, which is a 20% increase compared to the same period last year. The company reaffirmed its 2025 operating earnings guidance range of $5.75 to $5.95 per share and a long-term operating earnings growth rate of 6% to 8%.
Significant Load Growth
AEP's commercial load grew 12.3% in the first quarter of 2025 compared to the first quarter of last year. The company expects annual retail load growth of between 8% and 9% through 2027, largely driven by data center demand and industrial loads.
Regulatory and Legislative Successes
AEP reported a number of positive regulatory outcomes, including commission approvals for large load tariffs in Indiana, Kentucky, and West Virginia, and the passage of Ohio House Bill 15, which supports capital investment growth and customer benefits.
Major Investment Plans
AEP has committed to a $54 billion capital plan over the next five years, with potential incremental investments of up to $10 billion to support increasing electric demand. The company has already secured its equity needs through 2029.
Negative Updates
Residential Load Decline
AEP reported a decline in residential sales, which is being offset by an increase in C&I sales. The decrease is attributed to efficiency improvements and reduced throughput in residential sectors.
OVEC Cost Recovery Impact
Due to Ohio House Bill 15, AEP recorded a $28 million charge related to the write-off of previously deferred OVEC costs. The change in legislation will end the cost recovery, impacting future earnings by less than $10 million annually.
Company Guidance
During the American Electric Power (AEP) First Quarter 2025 Earnings Call, the company provided guidance on several key metrics. AEP reported operating earnings of $1.54 per share or $823 million for the first quarter, reaffirming their 2025 operating earnings guidance range of $5.75 to $5.95 per share and a long-term operating earnings growth rate of 6% to 8%. The company is committed to a $54 billion capital plan over the next five years, with potential for up to $10 billion in additional investments. AEP's total retail load growth is projected to reach 8% to 9% annually through 2027, driven by commercial customers, particularly in data centers and industrial sectors. Commercial load grew by 12.3% compared to the first quarter of the previous year. The company highlighted that approximately 80% of their rate-related revenue is secured for 2025, and they have completed anticipated equity needs through 2029 following a successful $2.3 billion forward equity issuance. AEP's credit metrics include an FFO to debt ratio of 13.2%, expected to improve by 40 to 60 basis points upon closing a minority equity interest investment. The company targets a 10% to 12% total annual shareholder return and remains focused on executing their growth strategy while maintaining financial discipline.American Electric Power Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
American Electric Power’s CIO Announces Resignation
Neutral
Mar 20, 2025
On March 17, 2025, Therace M. Risch, the Executive Vice President and Chief Information and Technology Officer of American Electric Power Company, Inc., announced her resignation effective April 1, 2025. This leadership change may impact the company’s operations and strategic direction in the technology and information domains.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.