American Electric Power (AEP) AI Stock Analysis

• Market Cap: $55.16B
• Dividend Yield: 3.6%
• Average Volume (3M): 2.59M
• Price to Earnings (P/E): 19.9
• Beta (1Y): 0.11
• Revenue Growth: 4.20%
• EPS Growth: -3.64%
• Country: US
• Employees: 16,330
• Sector: Utilities
• Sector Strength: 66
• Industry: Regulated Electric
• EPS (TTM): 1.54
• Shares Outstanding: 534,195,000
• 10 Day Avg. Volume: 3,021,592
• 30 Day Avg. Volume: 2,592,408
• PEG Ratio: -2.68
• Price to Book (P/B): 1.99
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -41.84
• Enterprise Value/Market Cap: 1.83
• Enterprise Value/Revenue: 1.28
• Enterprise Value/Gross Profit: 8.01
• Enterprise Value/Ebitda: 3.31
• 1Y Price Target: $111.38
• Price Target Upside: 7.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

• Rating: 68 Neutral
• Price Target: $112.00 ▲(7.84%Upside)

AEP's overall stock score is driven by solid financial performance and strategic growth initiatives highlighted in the earnings call. While the technical analysis indicates neutral momentum, the company's strong revenue growth and positive outlook for commercial and industrial segments provide a favorable long-term outlook.

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.

Legislation and Regulation

Positive impact of legislation and regulatory outcomes in Texas, Ohio, Oklahoma, and Kentucky.

Negative Factors

Equity and Share Count

Despite $2.4bn of forward equity issued, EPS estimates are unchanged, which could impact future share count.

Regulatory 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 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

American Electric Power generates revenue primarily through the sale of electricity to its customers. The company's Vertically Integrated Utilities segment earns income by owning and operating power plants, and then selling the generated electricity to residential, commercial, and industrial customers. AEP also makes money through its Transmission and Distribution Utilities segment, which involves the delivery of electricity across its vast network of transmission lines. Additionally, AEP Transmission Holdco contributes to revenue by developing and operating transmission projects that enhance the reliability of the power grid. Some of AEP's earnings are also derived from its investments in renewable energy projects and partnerships with other utility companies to expand its transmission capabilities. Regulatory frameworks and approved rate structures by state utility commissions further influence the company's revenue generation.

American Electric Power Financial Statement Overview

Summary

AEP demonstrates strong revenue growth and stable profitability, despite a slight decline in net profit margins. The high leverage is typical for the utility industry, and cash flows are robust, though negative free cash flow highlights the need for careful capital expenditure management.

Income Statement

The company's income statement shows a stable gross profit margin of approximately 62.6% TTM, indicating strong cost management. The net profit margin is 13.7% TTM, slightly below the previous annual figure of 15.0%, suggesting a minor decline in profitability. Revenue growth has been positive, with a 6.2% increase from 2023 to 2024 and a 2.2% TTM increase, reflecting steady demand and operational performance. EBIT and EBITDA margins TTM were 21.9% and 36.0%, respectively, reflecting efficient operations despite a slight decrease in net income.

Balance Sheet

The balance sheet displays a relatively high debt-to-equity ratio of 1.72 TTM, suggesting significant leverage but typical for the utility industry. The equity ratio is stable at 26.2% TTM, demonstrating a balanced capital structure. Return on equity (ROE) is 10.1% TTM, indicating moderate profitability. The company maintains adequate liquidity with sufficient cash reserves, though there is an upward trend in total debt levels.

Cash Flow

The cash flow statement reveals a robust operating cash flow to net income ratio of 2.46 TTM, indicating strong cash generation capabilities. However, the free cash flow has turned negative TTM, primarily due to significant capital expenditures, which suggests potential constraints in excess cash. Free cash flow growth rate shows volatility, as it turned negative from a positive annual figure, highlighting potential challenges in sustaining free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.16B	19.72B	18.98B	19.64B	16.79B	14.92B
Gross Profit	12.62B	12.46B	11.13B	11.29B	10.20B	9.54B
EBITDA	7.26B	8.10B	7.20B	7.10B	6.76B	6.22B
Net Income	2.76B	2.97B	2.21B	2.31B	2.49B	2.20B
Balance Sheet
Total Assets	104.39B	105.73B	96.68B	93.47B	87.67B	80.76B
Cash, Cash Equivalents and Short-Term Investments	463.60M	418.30M	544.40M	696.90M	623.80M	593.50M
Total Debt	46.93B	45.76B	43.61B	40.40B	36.66B	34.43B
Total Liabilities	77.03B	76.09B	71.40B	69.35B	64.99B	59.98B
Stockholders Equity	27.32B	26.94B	25.25B	23.89B	22.43B	20.55B
Cash Flow
Free Cash Flow	-1.30B	6.66B	-2.49B	-1.48B	-1.92B	-2.48B
Operating Cash Flow	6.81B	6.80B	5.01B	5.29B	3.84B	3.83B
Investing Cash Flow	-8.03B	-7.60B	-6.27B	-7.75B	-6.43B	-6.23B
Financing Cash Flow	1.23B	659.20M	1.08B	2.57B	2.61B	2.41B

American Electric Power Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 103.86
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 103.86 is above the 20-day moving average (MA) of 102.36, above the 50-day MA of 103.41, and above the 200-day MA of 99.43, indicating a neutral trend. The MACD of 0.11 indicates Negative momentum. The RSI at 52.41 is Neutral, neither overbought nor oversold. The STOCH value of 80.23 is Negative, 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
NGG	75 Outperform	$69.01B	17.96	8.31%	5.82%	-6.02%	7.24%
DUK	73 Outperform	$90.99B	19.53	9.48%	3.57%	5.02%	45.08%
EXC	73 Outperform	$43.33B	15.92	10.10%	3.73%	6.71%	16.09%
SO	70 Outperform	$100.57B	21.94	14.01%	3.25%	9.58%	8.02%
D	69 Neutral	$48.49B	21.33	8.22%	4.65%	3.62%	40.33%
AEP	68 Neutral	$55.16B	19.92	10.41%	3.60%	4.20%	-3.64%
Sector *	64 Neutral	£6.72B	7.04	15.34%	5.83%	2.03%	-25.14%

American Electric Power Corporate Events

American Electric Power Announces Executive Leadership Change

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.

American Electric Power Finalizes $2.82 Billion Partnership

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.