tiprankstipranks
Trending News
More News >
American Electric Power (AEP)
NASDAQ:AEP
Advertisement

American Electric Power (AEP) AI Stock Analysis

Compare
2,663 Followers

Top Page

AEP

American Electric Power

(NASDAQ:AEP)

Rating:74Outperform
Price Target:
$126.00
â–²(15.98% Upside)
AEP's overall stock score is driven by strong earnings performance and positive technical indicators. The company's strategic investments and regulatory achievements support future growth, but high leverage and cash flow challenges pose risks. The valuation is fair, with a reasonable P/E ratio and attractive dividend yield.
Positive Factors
Financial Guidance
AEP reaffirmed full-year guidance of $5.75-$5.95 and long-term EPS growth of 6%-8%.
Investment Strategy
AEP's growth outlook is driven primarily by an investment program focused on supply decarbonization and transmission, which should support a premium valuation over time.
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.
Legislation Impact
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)

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
Any
Retail Electric
Retail Electric
Measures performance in the retail electricity market, reflecting customer base size, pricing power, and market competitiveness.
Chart InsightsAmerican Electric Power's Retail Electric segment shows consistent growth in both Vertically Integrated Utilities and Transmission and Distribution Utilities. The latest earnings call highlights a record-breaking second quarter and an increased capital investment plan, driven by transformative load growth from data centers and manufacturing reshoring. This aligns with the upward revision of the 2025 earnings forecast and a long-term growth rate of 6% to 8%. However, challenges in regulatory recovery and potential tax credit uncertainties could impact future capital allocation and growth strategies.
Data provided by:Main Street Data

American Electric Power Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call conveyed a strong overall sentiment, with AEP showcasing record-breaking financial performance, significant capital plan expansion, robust load growth, and multiple positive legislative and regulatory developments. While there are some challenges related to renewable tax credit eligibility and timing of load ramp-up, the highlights of the call significantly outweigh the lowlights.
Q2-2025 Updates
Positive Updates
Record Second Quarter Operating Earnings
American Electric Power (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, a 14% increase from the previous year.
Significant Capital Plan Expansion
AEP is executing on a $54 billion capital plan and expects to announce a new 5-year capital plan of approximately $70 billion, reflecting transformative load growth across its 11-state footprint.
Robust Load Growth and Customer Commitments
AEP has increased firm customer commitments and expects to have 24 gigawatts of incremental load by the end of the decade, up from 21 gigawatts, driven primarily by data centers, reshoring of manufacturing, and economic development.
Positive Legislative and Regulatory Developments
AEP achieved several legislative and regulatory successes, including Texas House Bill 5247 and Senate Bill 998 in Oklahoma, which support increased capital investment and reduce regulatory lag.
Negative Updates
Challenges with Renewable Tax Credit Eligibility
Potential impacts from the executive order on tax qualification could affect the eligibility of some projects for tax credits, with a possibility of reallocating a couple of billion dollars from renewables to other sources of generation.
Concerns about Timing of Load Ramp-Up
There is some uncertainty about the timing of load ramp-up for data centers and other large customers, potentially affecting short-term financial performance.
Company Guidance
During the American Electric Power Second Quarter 2025 Earnings Call, the company provided an optimistic outlook for future growth, especially highlighting their financial performance and strategic capital investments. The company achieved its strongest ever second quarter operating earnings with $1.43 per share or $766 million, marking a significant improvement from the previous year. AEP is guiding towards the upper half of their $5.75 to $5.95 per share operating earnings range for the fiscal year. They plan to increase their capital investment from $54 billion to approximately $70 billion over five years, focusing 50% on transmission, 40% on generation, and 10% on distribution. This boost in capital is driven by a transformative load growth, with firm customer commitments for 24 gigawatts of incremental load by the end of the decade. Furthermore, AEP is navigating regulatory landscapes effectively, achieving constructive outcomes and securing necessary tariffs in multiple states, which supports their robust growth plan.

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
75
Positive
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.
Balance Sheet
65
Positive
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.
Cash Flow
60
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue20.92B19.92B19.38B19.31B16.62B14.91B
Gross Profit6.95B6.36B5.62B4.87B4.67B4.28B
EBITDA8.89B8.09B7.21B7.10B6.75B6.21B
Net Income3.65B2.97B2.21B2.31B2.49B2.20B
Balance Sheet
Total Assets107.78B103.08B96.68B93.40B87.67B80.76B
Cash, Cash Equivalents and Short-Term Investments439.30M418.30M544.40M697.00M623.80M593.50M
Total Debt46.62B45.76B43.61B41.58B36.66B34.43B
Total Liabilities76.81B76.09B71.40B69.35B64.99B59.98B
Stockholders Equity29.87B26.94B25.25B23.89B22.43B20.55B
Cash Flow
Free Cash Flow2.14B6.66B-2.49B-1.48B-1.92B-2.48B
Operating Cash Flow6.57B6.80B5.01B5.29B3.84B3.83B
Investing Cash Flow-9.69B-7.60B-6.27B-7.75B-6.43B-6.23B
Financing Cash Flow3.15B659.20M1.08B2.57B2.61B2.41B

American Electric Power Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price108.64
Price Trends
50DMA
108.69
Negative
100DMA
105.76
Positive
200DMA
101.57
Positive
Market Momentum
MACD
0.26
Positive
RSI
39.65
Neutral
STOCH
16.96
Positive
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 108.64 is below the 20-day moving average (MA) of 112.07, below the 50-day MA of 108.69, and above the 200-day MA of 101.57, indicating a neutral trend. The MACD of 0.26 indicates Positive momentum. The RSI at 39.65 is Neutral, neither overbought nor oversold. The STOCH value of 16.96 is Positive, 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 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
75
Outperform
$50.17B20.369.29%4.54%7.60%55.99%
74
Outperform
$58.88B16.1313.03%3.42%5.84%36.33%
73
Outperform
$93.99B19.869.60%3.47%4.07%9.94%
73
Outperform
$43.80B16.469.87%3.64%4.46%8.68%
71
Outperform
$68.39B17.538.31%4.46%-6.02%7.24%
66
Neutral
$17.25B17.875.54%3.65%6.63%11.55%
65
Neutral
$101.30B23.7812.89%3.18%8.53%-7.53%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AEP
American Electric Power
108.11
9.68
9.83%
D
Dominion Energy
58.79
3.65
6.62%
DUK
Duke Energy
120.61
8.17
7.27%
EXC
Exelon
43.34
6.53
17.74%
NGG
National Grid Transco
70.10
5.43
8.40%
SO
Southern Co
91.78
6.24
7.29%

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.Date of analysis: Aug 11, 2025