116.63 USD
-0.55 (-0.47%)
116.64 USD
+0.01 (+0.01%)
AEP gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 46 industry peers in the Electric Utilities industry. AEP has an excellent profitability rating, but there are concerns on its financial health. While showing a medium growth rate, AEP is valued expensive at the moment. AEP also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year AEP was profitable.
- AEP had a positive operating cash flow in the past year.
- In the past 5 years AEP has always been profitable.
- Each year in the past 5 years AEP had a positive operating cash flow.
1.2 Ratios
- With a decent Return On Assets value of 3.32%, AEP is doing good in the industry, outperforming 73.91% of the companies in the same industry.
- AEP has a Return On Equity of 12.03%. This is in the better half of the industry: AEP outperforms 65.22% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 4.13%, AEP is in line with its industry, outperforming 45.65% of the companies in the same industry.
- AEP had an Average Return On Invested Capital over the past 3 years of 3.55%. This is in line with the industry average of 4.58%.
- The 3 year average ROIC (3.55%) for AEP is below the current ROIC(4.13%), indicating increased profibility in the last year.
| 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
- With an excellent Profit Margin value of 17.23%, AEP belongs to the best of the industry, outperforming 86.96% of the companies in the same industry.
- AEP's Profit Margin has improved in the last couple of years.
- With a decent Operating Margin value of 24.93%, AEP is doing good in the industry, outperforming 67.39% of the companies in the same industry.
- AEP's Operating Margin has improved in the last couple of years.
- 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
- AEP has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
- AEP has more shares outstanding than it did 1 year ago.
- The number of shares outstanding for AEP has been increased compared to 5 years ago.
- The debt/assets ratio for AEP has been reduced compared to a year ago.
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.
- The Altman-Z score of AEP (0.98) is better than 65.22% of its industry peers.
- A Debt/Equity ratio of 1.49 is on the high side and indicates that AEP has dependencies on debt 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
WACC6.57%
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.
- A Quick Ratio of 0.53 indicates that AEP may have some problems paying its short term obligations.
- AEP has a worse Quick ratio (0.53) than 73.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.69 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 7.32% over the past year.
- Measured over the past 5 years, AEP shows a small growth in Earnings Per Share. The EPS has been growing by 5.71% on average per year.
- Looking at the last year, AEP shows a quite strong growth in Revenue. The Revenue has grown by 8.44% in the last year.
- 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
- Based on estimates for the next years, AEP will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.09% on average per year.
- 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 Y6.48%
EPS Next 2Y6.71%
EPS Next 3Y7.04%
EPS Next 5Y8.09%
Revenue Next Year5.55%
Revenue Next 2Y6.58%
Revenue Next 3Y6.41%
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.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 19.41, AEP is valued on the expensive side.
- Compared to the rest of the industry, the Price/Earnings ratio of AEP is on the same level as its industry peers.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, AEP is valued a bit cheaper.
- AEP is valuated rather expensively with a Price/Forward Earnings ratio of 18.26.
- The rest of the industry has a similar Price/Forward Earnings ratio as AEP.
- When comparing the Price/Forward Earnings ratio of AEP to the average of the S&P500 Index (24.26), we can say AEP is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.41 | ||
| Fwd PE | 18.26 |
4.2 Price Multiples
- AEP's Enterprise Value to EBITDA is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.19 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- AEP has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.99
PEG (5Y)3.4
EPS Next 2Y6.71%
EPS Next 3Y7.04%
5. Dividend
5.1 Amount
- AEP has a Yearly Dividend Yield of 3.18%. Purely for dividend investing, there may be better candidates out there.
- AEP's Dividend Yield is comparable with the industry average which is at 2.93.
- AEP's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.18% |
5.2 History
- The dividend of AEP has a limited annual growth rate of 5.62%.
- AEP has been paying a dividend for at least 10 years, so it has 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.
- AEP's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP54.46%
EPS Next 2Y6.71%
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 6.48% in the next year.