116.63 USD
-0.55 (-0.47%)
116.64 USD
+0.01 (+0.01%)
We assign a fundamental rating of 4 out of 10 to AEP. AEP was compared to 46 industry peers in the Electric Utilities industry. While AEP belongs to the best of the industry regarding profitability, there are concerns on its financial health. AEP is quite expensive at the moment. It does show a decent growth rate. AEP also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year AEP was profitable.
- In the past year AEP had a positive cash flow from operations.
- In the past 5 years AEP has always been profitable.
- AEP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- The Return On Assets of AEP (3.32%) is better than 73.91% of its industry peers.
- AEP's Return On Equity of 12.03% is fine compared to the rest of the industry. AEP outperforms 65.22% of its industry peers.
- AEP has a Return On Invested Capital (4.13%) which is in line with its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for AEP is in line with the industry average of 4.58%.
- The last Return On Invested Capital (4.13%) for AEP is above the 3 year average (3.55%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.32% | ||
| ROE | 12.03% | ||
| ROIC | 4.13% |
ROA(3y)2.54%
ROA(5y)2.64%
ROE(3y)9.79%
ROE(5y)10.22%
ROIC(3y)3.55%
ROIC(5y)3.47%
1.3 Margins
- AEP has a Profit Margin of 17.23%. This is amongst the best in the industry. AEP outperforms 86.96% of its industry peers.
- AEP's Profit Margin has improved in the last couple of years.
- The Operating Margin of AEP (24.93%) is better than 67.39% of its industry peers.
- In the last couple of years the Operating Margin of AEP has grown nicely.
- AEP's Gross Margin of 68.45% is in line compared to the rest of the industry. AEP outperforms 58.70% of its industry peers.
- AEP's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 24.93% | ||
| PM (TTM) | 17.23% | ||
| GM | 68.45% |
OM growth 3Y3.41%
OM growth 5Y5.01%
PM growth 3Y0.51%
PM growth 5Y4.04%
GM growth 3Y1.2%
GM growth 5Y-2.58%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so AEP is destroying value.
- The number of shares outstanding for AEP has been increased compared to 1 year ago.
- The number of shares outstanding for AEP has been increased compared to 5 years ago.
- Compared to 1 year ago, AEP has an improved debt to assets ratio.
2.2 Solvency
- Based on the Altman-Z score of 0.98, we must say that AEP is in the distress zone and has some risk of bankruptcy.
- AEP has a Altman-Z score of 0.98. This is in the better half of the industry: AEP outperforms 65.22% of its industry peers.
- AEP has a Debt/Equity ratio of 1.49. This is a high value indicating a heavy dependency on external financing.
- AEP has a Debt to Equity ratio (1.49) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.49 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.98 |
ROIC/WACC0.63
WACC6.55%
2.3 Liquidity
- AEP has a Current Ratio of 0.69. This is a bad value and indicates that AEP is not financially healthy enough and could expect problems in meeting its short term obligations.
- AEP has a Current ratio of 0.69. This is in the lower half of the industry: AEP underperforms 76.09% of its industry peers.
- AEP has a Quick Ratio of 0.69. This is a bad value and indicates that AEP is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Quick ratio of AEP (0.53) is worse than 73.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.69 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
- AEP shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.32%.
- The Earnings Per Share has been growing slightly by 5.71% on average over the past years.
- The Revenue has grown by 8.44% in the past year. This is quite good.
- Measured over the past years, AEP shows a small growth in Revenue. The Revenue has been growing by 4.85% on average per year.
EPS 1Y (TTM)7.32%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%-2.7%
Revenue 1Y (TTM)8.44%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.3%
3.2 Future
- The Earnings Per Share is expected to grow by 8.09% on average over the next years. This is quite good.
- Based on estimates for the next years, AEP will show a small growth in Revenue. The Revenue will grow by 7.46% on average per year.
EPS Next Y6.51%
EPS Next 2Y6.69%
EPS Next 3Y7.04%
EPS Next 5Y8.09%
Revenue Next Year5.56%
Revenue Next 2Y6.52%
Revenue Next 3Y6.39%
Revenue Next 5Y7.46%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 19.41, the valuation of AEP can be described as rather expensive.
- AEP's Price/Earnings ratio is in line with the industry average.
- The average S&P500 Price/Earnings ratio is at 27.21. AEP is valued slightly cheaper when compared to this.
- Based on the Price/Forward Earnings ratio of 18.27, the valuation of AEP can be described as rather expensive.
- AEP's Price/Forward Earnings is on the same level as the industry average.
- AEP is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.41 | ||
| Fwd PE | 18.27 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEP is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.15 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The decent profitability rating of AEP may justify a higher PE ratio.
PEG (NY)2.98
PEG (5Y)3.4
EPS Next 2Y6.69%
EPS Next 3Y7.04%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.24%, AEP has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 2.90, AEP has a dividend in line with its industry peers.
- AEP's Dividend Yield is rather good when compared to the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.24% |
5.2 History
- The dividend of AEP has a limited annual growth rate of 5.62%.
- AEP has paid a dividend for at least 10 years, which is a reliable track record.
- AEP has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)5.62%
Div Incr Years15
Div Non Decr Years20
5.3 Sustainability
- AEP pays out 54.46% of its income as dividend. This is a bit on the high side, but may be sustainable.
- The dividend of AEP is growing, but earnings are growing more, so the dividend growth is sustainable.
DP54.46%
EPS Next 2Y6.69%
EPS Next 3Y7.04%
AMERICAN ELECTRIC POWER / AEP FAQ
Can you provide the ChartMill fundamental rating for AMERICAN ELECTRIC POWER?
ChartMill assigns a fundamental rating of 4 / 10 to AEP.
Can you provide the valuation status for AMERICAN ELECTRIC POWER?
ChartMill assigns a valuation rating of 2 / 10 to AMERICAN ELECTRIC POWER (AEP). This can be considered as Overvalued.
Can you provide the profitability details for AMERICAN ELECTRIC POWER?
AMERICAN ELECTRIC POWER (AEP) has a profitability rating of 7 / 10.
What is the financial health of AMERICAN ELECTRIC POWER (AEP) stock?
The financial health rating of AMERICAN ELECTRIC POWER (AEP) is 1 / 10.
What is the earnings growth outlook for AMERICAN ELECTRIC POWER?
The Earnings per Share (EPS) of AMERICAN ELECTRIC POWER (AEP) is expected to grow by 6.51% in the next year.