American Electric Power (AEP) AI Stock Analysis

• Market Cap: $68.84B
• Dividend Yield: 3.25%
• Average Volume (3M): 3.28M
• Price to Earnings (P/E): 19.1
• Beta (1Y): -0.01
• Revenue Growth: 7.66%
• EPS Growth: 37.42%
• Country: US
• Employees: 16,330
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 1.19
• Shares Outstanding: 540,861,450
• 10 Day Avg. Volume: 3,321,657
• 30 Day Avg. Volume: 3,279,957
• PEG Ratio: 0.88
• Price to Book (P/B): 1.92
• Price to Sales (P/S): 2.75
• P/FCF Ratio: 8.78
• Enterprise Value/Market Cap: 1.74
• Enterprise Value/Revenue: 5.51
• Enterprise Value/Gross Profit: 17.31
• Enterprise Value/Ebitda: 13.65
• 1Y Price Target: $132.92
• Price Target Upside: 2.74% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 80 Outperform
• Price Target: $141.00 ▲(8.99% Upside)
• Action: Reiterated Date: 02/13/26
• Date: Action: Reiterated 02/13/26

The score is driven primarily by strong earnings-call momentum (guidance beat/reaffirmation and an expanded contracted load and capital runway) and solid technical strength with the stock trading above key moving averages. Financial performance is steady but moderated by cash-flow-to-earnings mismatch and data consistency concerns around 2025 balance-sheet metrics, while valuation is supportive but not a clear bargain.

Positive Factors

Contracted incremental load (56 GW)

Doubling contracted incremental load to 56 GW, backed by signed agreements and substantial ERCOT LOAs, creates long-duration, take-or-pay style cash flows. This materially expands visible demand that supports multi-year rate base growth and predictable regulated and contracted revenue streams.

Transmission scale & awarded projects

AEP's dominant 765 kV transmission footprint and recently awarded projects (~$4.7B) provide structural competitive advantage. Scale in high-voltage transmission supports regulatory recovery, lower per-unit costs, and a durable pipeline of rate-base earning projects that underpin long-term regulated returns.

Reaffirmed guidance & $72B capital plan

Management's reaffirmed guidance, a premium 7%–9% long-term earnings target, and a $72B capital plan signal disciplined, multi-year growth through regulated investments. The plan drives structural rate-base CAGR and supports sustainable earnings power and ROE improvement from regulated asset additions.

Negative Factors

Balance sheet inconsistency / leverage uncertainty

A sharp, atypical 2025 leverage shift and missing asset fields reduce confidence in reported leverage and comparability. For a capital-intensive utility, unclear balance-sheet metrics complicate assessment of financing flexibility, covenants, and true credit risk, raising structural funding uncertainty.

Weak cash conversion & FCF volatility

Operating cash conversion at ~0.52x of net income and historically volatile FCF reflect timing, working-capital swings, and heavy capex cycles. Persistently weak cash conversion increases reliance on external financing for growth, raising structural funding and execution risk across multi-year capital plans.

Execution & financing risk for large buildout

The sizable buildout and incremental load require faster interconnection, regulatory reform, and additional financing. Delays from RTO/state processes, supply chain or labor constraints, and unclear incremental capital treatment can push back revenue realization and pressure credit metrics over the multi-year execution horizon.

American Electric Power Business Overview & Revenue Model

Company Description

American 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 Money

AEP generates revenue primarily through the sale of electricity to its customers, which includes residential, commercial, and industrial sectors. The company operates regulated utility subsidiaries, which are allowed to charge rates set by state public utility commissions. These rates are typically based on the cost of providing service, including operating expenses, maintenance costs, and a reasonable return on investment. Key revenue streams include electricity sales, transmission service fees, and distribution service fees. Additionally, AEP invests in renewable energy projects and may receive incentives or tax credits that contribute to its revenue. Strategic partnerships with other energy companies and investments in energy infrastructure also enhance its earning potential.

American Electric Power Financial Statement Overview

Summary

Steady revenue growth and strengthening profitability in 2024–2025 support stable, regulated earnings power, and operating cash flow remains consistently positive. Offsetting this, free cash flow has been volatile (though improved recently), operating cash flow is only ~0.52x of net income in 2024–2025, and several 2025 balance-sheet/margin fields appear inconsistent (e.g., sharp leverage shift), reducing confidence in comparability and true balance-sheet risk.

Income Statement

Revenue shows a steady upward trajectory from 2020 to 2025 (with only a modest dip in 2020), and profitability strengthened meaningfully in 2024–2025 as net income rose alongside improving net margins (~11% in 2023 to ~16% in 2025). EBITDA margins are solid for a regulated utility, supporting the view of stable, rate-backed earnings power. Offsetting this, several 2025 margin fields appear inconsistent/missing versus prior years (e.g., gross profit and EBIT margin), which reduces transparency and confidence in year-to-year comparability.

Balance Sheet

The balance sheet reflects typical utility leverage: debt-to-equity runs high in 2020–2024 (~1.6–1.7x), consistent with capital-intensive regulated operations, and returns on equity are steady around ~9%–11%, indicating reliable profitability. However, 2025 debt and leverage metrics appear to shift sharply versus the prior pattern (debt-to-equity dropping to ~0.14x and total assets missing), suggesting either unusual deleveraging or data inconsistency—creating uncertainty around true leverage and balance-sheet risk.

Cash Flow

Operating cash flow is consistently positive and generally improving versus earlier years, supporting the stability expected from a regulated utility. Free cash flow is volatile: materially negative from 2020–2023 (consistent with heavy capital spending cycles), then sharply positive in 2024–2025 with free cash flow roughly matching net income (~0.98x), indicating improved cash conversion. A key weakness is that operating cash flow covers only about half of net income in recent years (~0.52x in 2024–2025), pointing to working-capital swings, timing effects, or non-cash earnings components that can create periodic funding needs.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	21.78B	19.92B	19.38B	19.31B	16.62B
Gross Profit	6.93B	6.36B	5.62B	4.87B	4.67B
EBITDA	8.79B	8.09B	7.21B	7.10B	6.75B
Net Income	3.58B	2.97B	2.21B	2.31B	2.49B
Balance Sheet
Total Assets	117.25B	103.08B	96.68B	93.40B	87.67B
Cash, Cash Equivalents and Short-Term Investments	488.00M	418.30M	544.40M	697.00M	623.80M
Total Debt	50.24B	45.76B	43.61B	41.58B	36.66B
Total Liabilities	84.99B	76.09B	71.40B	69.35B	64.99B
Stockholders Equity	31.14B	26.94B	25.25B	23.89B	22.43B
Cash Flow
Free Cash Flow	6.81B	6.66B	-2.49B	-1.48B	-1.92B
Operating Cash Flow	6.94B	6.80B	5.01B	5.29B	3.84B
Investing Cash Flow	-9.12B	-7.60B	-6.27B	-7.75B	-6.43B
Financing Cash Flow	2.20B	659.20M	1.08B	2.57B	2.61B

American Electric Power Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 129.37
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 129.37 is above the 20-day moving average (MA) of 121.88, above the 50-day MA of 117.79, and above the 200-day MA of 111.05, indicating a bullish trend. The MACD of 3.22 indicates Negative momentum. The RSI at 72.06 is Negative, neither overbought nor oversold. The STOCH value of 66.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AEP.

American Electric Power Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AEP	80 Outperform	$68.84B	19.11	12.33%	3.25%	7.66%	37.42%
NGG	74 Outperform	$90.11B	24.12	7.53%	4.03%	-7.06%	38.21%
DUK	71 Outperform	$97.39B	19.81	9.74%	3.61%	4.80%	14.44%
SO	69 Neutral	$100.24B	23.13	12.54%	3.40%	9.40%	-6.05%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
D	65 Neutral	$55.27B	22.02	9.27%	4.59%	12.72%	4.90%
EXC	65 Neutral	$48.32B	17.27	9.94%	3.68%	6.07%	15.20%

American Electric Power Corporate Events

AEP Subsidiary Advances Major Wyoming Fuel Cell Project

On January 4, 2026, an unregulated subsidiary of AEP signed an unconditional agreement to purchase a substantial portion of its option for solid oxide fuel cells for approximately $2.65 billion to develop and build a fuel cell generation facility near Cheyenne, Wyoming, following an initial 100 MW purchase agreement executed in November 2024. The subsidiary also entered into a 20-year offtake arrangement with a high investment-grade customer for 100% of the facility’s output, subject to conditions AEP expects to satisfy by the second quarter of 2026, with contractual protections providing that AEP will be compensated for all capital and costs incurred if those conditions are not met, underscoring the company’s move into large-scale fuel cell generation while managing financial risk for shareholders and stakeholders.

The most recent analyst rating on (AEP) stock is a Hold with a $127.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.

American Electric Power Reaches New Governance Accord With Icahn

On December 22, 2025, American Electric Power entered into a Board Observer Agreement with Carl Icahn’s investment entities and Andrew J. Teno, granting Teno a non‑voting observer seat on AEP’s board and securing standstill and mutual non‑disparagement commitments from the Icahn Group; at the same time, the company and Icahn’s group terminated their February 12, 2024 Director Appointment and Nomination Agreement, signaling a shift from a more activist-linked board nomination framework to a less formal, observer‑based relationship. Separately, on December 2, 2025, AEP’s board approved, effective July 1, 2026, a streamlining of its governance structure by cutting its active committees from seven to five—eliminating the Finance Committee by shifting its responsibilities to the full board and Audit Committee, and merging the Nominating and Governance Committee with the Human Resources Committee into a new Nomination, Governance & Compensation Committee—accompanied by bylaw amendments adopted on December 22, 2025 to reflect the revised committee naming and responsibilities, moves aimed at reducing overlapping oversight and consolidating complementary governance and compensation work for greater efficiency.

The most recent analyst rating on (AEP) stock is a Hold with a $127.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.

American Electric Power Grants CEO Long-Term Retention Equity Award

On December 18, 2025, American Electric Power’s board approved a special equity award for Chair, President and CEO William J. Fehrman as part of the company’s retention strategy and to further align his compensation with company performance. The package consists of $10 million in performance shares that may vest based on relative total shareholder return over a five-year period ending December 31, 2030, subject to his continued employment, and $5 million in restricted stock units that will vest on December 31, 2030 if he remains with AEP, underscoring the company’s focus on long-term leadership stability and performance-based executive incentives.

The most recent analyst rating on (AEP) stock is a Buy with a $137.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.

American Electric Power Announces $1 Billion Debenture Sale

On December 3, 2025, American Electric Power Company, Inc. announced the entry into an Underwriting Agreement for the offering and sale of $1 billion in junior subordinated debentures. This financial move, involving Series C and Series D Debentures, aims to strengthen the company’s financial position by increasing the aggregate principal amount of outstanding debentures to $1.5 billion each for both series, potentially impacting its market standing and stakeholder interests.

The most recent analyst rating on (AEP) stock is a Buy with a $128.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.

American Electric Power’s New $3.5 Billion Stock Agreement

On November 25, 2025, American Electric Power Company, Inc. entered into a Distribution Agreement with several financial institutions to sell up to $3.5 billion of its common stock. This agreement allows for sales through various methods, including at-the-market offerings and forward stock purchase transactions, which could impact the company’s capital structure and market positioning. The company also terminated a previous agreement from November 2023, which had a lower sales cap of $1.7 billion, indicating a strategic shift in its funding approach.

The most recent analyst rating on (AEP) stock is a Buy with a $128.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.