American Electric Power (AEP) AI Stock Analysis

• Market Cap: $61.19B
• Dividend Yield: 3.26%
• Average Volume (3M): 3.36M
• Price to Earnings (P/E): 16.8
• Beta (1Y): -0.03
• Revenue Growth: 7.66%
• EPS Growth: 37.42%
• Country: US
• Employees: 16,330
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 1.80
• Shares Outstanding: 534,094,540
• 10 Day Avg. Volume: 3,071,251
• 30 Day Avg. Volume: 3,364,619
• PEG Ratio: 0.52
• Price to Book (P/B): 1.81
• Price to Sales (P/S): 2.45
• P/FCF Ratio: 7.34
• Enterprise Value/Market Cap: 1.77
• Enterprise Value/Revenue: 5.04
• Enterprise Value/Gross Profit: 13.60
• Enterprise Value/Ebitda: 11.92
• 1Y Price Target: $127.21
• Price Target Upside: 10.90% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15
• EPS Forecast (FY): 5.91
• Revenue Forecast (FY): $21.39B

• Rating: 68 Neutral
• Price Target: $126.00 ▲(9.84% Upside)

American Electric Power's strong financial performance and positive earnings call outlook are significant strengths. However, technical indicators suggest bearish momentum, and valuation metrics do not indicate significant undervaluation. The strategic issuance of debentures supports long-term growth.

Positive Factors

Long-Term Earnings Growth

The increased long-term earnings growth rate reflects AEP's strategic focus on expanding its revenue base, supported by robust capital investments, which can enhance its market position and shareholder value over time.

Capital Investment Plan

AEP's substantial capital investment plan is poised to drive future growth by enhancing infrastructure, supporting load growth, and improving operational efficiency, which are critical for long-term success in the utility sector.

Regulatory and Legislative Progress

Favorable regulatory developments provide a stable environment for AEP to execute its growth strategies, ensuring better returns on investments and enhancing its competitive edge in the regulated utility market.

Negative Factors

Debt Levels

AEP's reliance on debt financing could pose risks, especially in a rising interest rate environment, potentially impacting its financial flexibility and increasing the cost of capital.

Cash Flow Volatility

Volatility in cash flow generation may challenge AEP's ability to consistently fund operations and capital projects, affecting its long-term financial stability and growth execution.

Regulatory Challenges in West Virginia

Regulatory challenges in West Virginia could hinder AEP's ability to optimize its rate base and return on equity, potentially impacting profitability and operational efficiency in that region.

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

American Electric Power demonstrates strong profitability with high EBIT and net profit margins. However, challenges exist in maintaining gross profit margins and managing debt levels. Cash flow generation is generally positive, but historical volatility suggests potential risks.

Income Statement

American Electric Power shows a stable revenue growth rate of 2.5% TTM, with strong EBIT and EBITDA margins at 70.6% and 112.7% respectively. The net profit margin is exceptionally high at 46.8% TTM, indicating robust profitability. However, the gross profit margin has decreased compared to previous years, suggesting potential cost management issues.

Balance Sheet

The company's debt-to-equity ratio is 1.56 TTM, indicating a moderate level of leverage. Return on equity is strong at 36.2%, reflecting efficient use of equity. However, the equity ratio is relatively low, suggesting a higher reliance on debt financing, which could pose risks in a rising interest rate environment.

Cash Flow

Operating cash flow is healthy, with a coverage ratio of 0.57 TTM. Free cash flow growth is positive at 1.05% TTM, and the free cash flow to net income ratio is 0.33, indicating a reasonable conversion of profits into cash. However, the company has experienced fluctuations in free cash flow in previous years, which could indicate volatility in cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	21.44B	19.92B	19.38B	19.31B	16.62B	14.91B
Gross Profit	7.95B	6.36B	5.62B	4.87B	4.67B	4.28B
EBITDA	9.08B	8.09B	7.21B	7.10B	6.75B	6.21B
Net Income	3.66B	2.97B	2.21B	2.31B	2.49B	2.20B
Balance Sheet
Total Assets	110.25B	103.08B	96.68B	93.40B	87.67B	80.76B
Cash, Cash Equivalents and Short-Term Investments	1.33B	418.30M	544.40M	697.00M	623.80M	593.50M
Total Debt	47.89B	45.76B	43.61B	41.58B	36.66B	34.43B
Total Liabilities	78.71B	76.09B	71.40B	69.35B	64.99B	59.98B
Stockholders Equity	30.39B	26.94B	25.25B	23.89B	22.43B	20.55B
Cash Flow
Free Cash Flow	2.17B	6.66B	-2.49B	-1.48B	-1.92B	-2.48B
Operating Cash Flow	6.86B	6.80B	5.01B	5.29B	3.84B	3.83B
Investing Cash Flow	-10.58B	-7.60B	-6.27B	-7.75B	-6.43B	-6.23B
Financing Cash Flow	4.53B	659.20M	1.08B	2.57B	2.61B	2.41B

American Electric Power Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 114.71
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 114.71 is below the 20-day moving average (MA) of 118.32, below the 50-day MA of 118.51, and above the 200-day MA of 108.44, indicating a neutral trend. The MACD of -1.34 indicates Positive momentum. The RSI at 38.42 is Neutral, neither overbought nor oversold. The STOCH value of 24.72 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AEP.

American Electric Power Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NGG	74 Outperform	$74.38B	20.12	7.53%	4.03%	-7.06%	38.21%
DUK	70 Outperform	$89.89B	18.17	9.92%	3.59%	4.80%	14.44%
AEP	68 Neutral	$61.19B	16.76	12.85%	3.26%	7.66%	37.42%
EXC	67 Neutral	$44.21B	15.66	10.31%	3.62%	6.07%	15.20%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
SO	64 Neutral	$94.38B	21.31	13.06%	3.38%	9.40%	-6.05%
D	63 Neutral	$50.67B	20.19	9.27%	4.44%	12.72%	4.90%

American Electric Power Corporate Events

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.

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.

American Electric Power Issues $2 Billion in Debentures

On September 23, 2025, American Electric Power Company, Inc. announced the issuance of $1.1 billion in Series C Debentures and $900 million in Series D Debentures, both due in 2056. This strategic financial move is expected to bolster the company’s capital structure and potentially enhance its market position by securing long-term funding.