AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
USA - NASDAQ:AEP - US0255371017 - Common Stock
109.46 USD
+0.72 (+0.66%)
109.46 USD
0 (0%)
Overall AEP gets a fundamental rating of 4 out of 10. We evaluated AEP against 47 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. While showing a medium growth rate, AEP is valued expensive at the moment. Finally AEP also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
AEP had positive earnings in the past year.
In the past year AEP had a positive cash flow from operations.
AEP had positive earnings in each of the past 5 years.
AEP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of AEP (3.39%) is better than 68.09% of its industry peers.
AEP has a better Return On Equity (12.20%) than 70.21% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.14%, AEP is in line with its industry, outperforming 48.94% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for AEP is in line with the industry average of 5.06%.
The last Return On Invested Capital (4.14%) for AEP is above the 3 year average (3.55%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.39% | ||
| ROE | 12.2% | ||
| ROIC | 4.14% |
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 17.66%, AEP belongs to the best of the industry, outperforming 85.11% of the companies in the same industry.
AEP's Profit Margin has improved in the last couple of years.
The Operating Margin of AEP (24.82%) is better than 65.96% of its industry peers.
In the last couple of years the Operating Margin of AEP has grown nicely.
The Gross Margin of AEP (69.10%) is better than 61.70% of its industry peers.
In the last couple of years the Gross Margin of AEP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 24.82% | ||
| PM (TTM) | 17.66% | ||
| GM | 69.1% |
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.
AEP has more shares outstanding than it did 5 years ago.
AEP has a better debt/assets ratio than last year.
2.2 Solvency
AEP has an Altman-Z score of 0.94. This is a bad value and indicates that AEP is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of AEP (0.94) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.43 is on the high side and indicates that AEP has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 1.43, AEP is in line with its industry, outperforming 48.94% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.43 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.94 |
ROIC/WACC0.65
WACC6.37%
2.3 Liquidity
AEP has a Current Ratio of 0.55. 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 worse Current ratio (0.55) than 85.11% of its industry peers.
A Quick Ratio of 0.41 indicates that AEP may have some problems paying its short term obligations.
The Quick ratio of AEP (0.41) is worse than 87.23% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.41 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 9.78% over the past year.
The Earnings Per Share has been growing slightly by 5.71% on average over the past years.
The Revenue has been growing slightly by 5.85% in the past 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)9.78%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%14.4%
Revenue 1Y (TTM)5.85%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.09%
3.2 Future
The Earnings Per Share is expected to grow by 7.03% on average over the next years.
The Revenue is expected to grow by 5.58% on average over the next years.
EPS Next Y6.22%
EPS Next 2Y6.6%
EPS Next 3Y7.05%
EPS Next 5Y7.03%
Revenue Next Year5.51%
Revenue Next 2Y4.57%
Revenue Next 3Y4.39%
Revenue Next 5Y5.58%
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 stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 18.06, AEP is valued on the expensive side.
AEP's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.30, AEP is valued a bit cheaper.
The Price/Forward Earnings ratio is 17.17, which indicates a rather expensive current valuation of AEP.
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 22.73, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.06 | ||
| Fwd PE | 17.17 |
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 | 11.91 |
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)2.9
PEG (5Y)3.16
EPS Next 2Y6.6%
EPS Next 3Y7.05%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.42%, AEP has a reasonable but not impressive dividend return.
AEP's Dividend Yield is a higher than the industry average which is at 3.56.
Compared to an average S&P500 Dividend Yield of 2.41, AEP pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.42% |
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
53.93% of the earnings are spent on dividend by AEP. 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.
DP53.93%
EPS Next 2Y6.6%
EPS Next 3Y7.05%
109.46
+0.72 (+0.66%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners86.35%
Inst Owner Change-0.87%
Ins Owners0.03%
Ins Owner Change4.32%
Market Cap58.54B
Analysts70
Price Target116.84 (6.74%)
Short Float %4.17%
Short Ratio6.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.42% |
Yearly Dividend3.6
Dividend Growth(5Y)5.62%
DP53.93%
Div Incr Years15
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)10.1%
Min EPS beat(2)8.95%
Max EPS beat(2)11.24%
EPS beat(4)3
Avg EPS beat(4)5.16%
Min EPS beat(4)-1.19%
Max EPS beat(4)11.24%
EPS beat(8)6
Avg EPS beat(8)2.64%
EPS beat(12)8
Avg EPS beat(12)2.26%
EPS beat(16)10
Avg EPS beat(16)1.83%
Revenue beat(2)2
Avg Revenue beat(2)3.06%
Min Revenue beat(2)1.47%
Max Revenue beat(2)4.64%
Revenue beat(4)2
Avg Revenue beat(4)-0.18%
Min Revenue beat(4)-5.22%
Max Revenue beat(4)4.64%
Revenue beat(8)2
Avg Revenue beat(8)-2.35%
Revenue beat(12)4
Avg Revenue beat(12)2.05%
Revenue beat(16)8
Avg Revenue beat(16)3.21%
PT rev (1m)0.61%
PT rev (3m)4.56%
EPS NQ rev (1m)-0.87%
EPS NQ rev (3m)-3.34%
EPS NY rev (1m)0.62%
EPS NY rev (3m)0.54%
Revenue NQ rev (1m)3.35%
Revenue NQ rev (3m)-0.17%
Revenue NY rev (1m)0.66%
Revenue NY rev (3m)0.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.06 | ||
| Fwd PE | 17.17 | ||
| P/S | 2.83 | ||
| P/FCF | N/A | ||
| P/OCF | 8.91 | ||
| P/B | 1.96 | ||
| P/tB | 1.96 | ||
| EV/EBITDA | 11.91 |
EPS(TTM)6.06
EY5.54%
EPS(NY)6.37
Fwd EY5.82%
FCF(TTM)-3.51
FCFYN/A
OCF(TTM)12.29
OCFY11.23%
SpS38.64
BVpS55.95
TBVpS55.85
PEG (NY)2.9
PEG (5Y)3.16
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.39% | ||
| ROE | 12.2% | ||
| ROCE | 5.33% | ||
| ROIC | 4.14% | ||
| ROICexc | 4.16% | ||
| ROICexgc | 4.16% | ||
| OM | 24.82% | ||
| PM (TTM) | 17.66% | ||
| GM | 69.1% | ||
| FCFM | N/A |
ROA(3y)2.54%
ROA(5y)2.64%
ROE(3y)9.79%
ROE(5y)10.22%
ROIC(3y)3.55%
ROIC(5y)3.47%
ROICexc(3y)3.57%
ROICexc(5y)3.49%
ROICexgc(3y)3.58%
ROICexgc(5y)3.5%
ROCE(3y)4.66%
ROCE(5y)4.55%
ROICexcg growth 3Y2.86%
ROICexcg growth 5Y3.59%
ROICexc growth 3Y2.86%
ROICexc growth 5Y3.6%
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%
F-Score6
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.43 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 4.98 | ||
| Cap/Depr | 243.45% | ||
| Cap/Sales | 40.88% | ||
| Interest Coverage | 2.7 | ||
| Cash Conversion | 76.4% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.55 | ||
| Quick Ratio | 0.41 | ||
| Altman-Z | 0.94 |
F-Score6
WACC6.37%
ROIC/WACC0.65
Cap/Depr(3y)223.56%
Cap/Depr(5y)219.34%
Cap/Sales(3y)37.81%
Cap/Sales(5y)38.02%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)9.78%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%14.4%
EPS Next Y6.22%
EPS Next 2Y6.6%
EPS Next 3Y7.05%
EPS Next 5Y7.03%
Revenue 1Y (TTM)5.85%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%11.09%
Revenue Next Year5.51%
Revenue Next 2Y4.57%
Revenue Next 3Y4.39%
Revenue Next 5Y5.58%
EBIT growth 1Y26.94%
EBIT growth 3Y9.11%
EBIT growth 5Y10.1%
EBIT Next Year85.62%
EBIT Next 3Y30.54%
EBIT Next 5Y23.31%
FCF growth 1Y46.54%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y57.25%
OCF growth 3Y21.01%
OCF growth 5Y9.77%