AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - Nasdaq - US0255371017 - Common Stock - Currency: USD
Overall AEP gets a fundamental rating of 3 out of 10. We evaluated AEP against 47 industry peers in the Electric Utilities industry. AEP has a medium profitability rating, but doesn't score so well on its financial health evaluation. AEP is quite expensive at the moment. It does show a decent growth rate. Finally 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.
In the past 5 years AEP always reported a positive cash flow from operatings.
1.2 Ratios
AEP's Return On Assets of 2.65% is on the low side compared to the rest of the industry. AEP is outperformed by 61.70% of its industry peers.
With a Return On Equity value of 10.10%, AEP perfoms like the industry average, outperforming 53.19% of the companies in the same industry.
AEP has a worse Return On Invested Capital (3.85%) than 61.70% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AEP is significantly below the industry average of 38.54%.
The last Return On Invested Capital (3.85%) for AEP is above the 3 year average (3.55%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.65% | ||
| ROE | 10.1% | ||
| ROIC | 3.85% |
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 (13.71%) which is comparable to the rest of the industry.
In the last couple of years the Profit Margin of AEP has grown nicely.
AEP has a better Operating Margin (22.61%) than 61.70% of its industry peers.
In the last couple of years the Operating Margin of AEP has grown nicely.
AEP has a better Gross Margin (69.18%) than 65.96% of its industry peers.
In the last couple of years the Gross Margin of AEP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 22.61% | ||
| PM (TTM) | 13.71% | ||
| GM | 69.18% |
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.
The debt/assets ratio for AEP has been reduced compared to a year ago.
2.2 Solvency
AEP has an Altman-Z score of 0.87. This is a bad value and indicates that AEP is not financially healthy and even has some risk of bankruptcy.
AEP's Altman-Z score of 0.87 is in line compared to the rest of the industry. AEP outperforms 51.06% of its industry peers.
A Debt/Equity ratio of 1.54 is on the high side and indicates that AEP has dependencies on debt financing.
With a Debt to Equity ratio value of 1.54, AEP perfoms like the industry average, outperforming 42.55% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.87 |
ROIC/WACC0.59
WACC6.48%
2.3 Liquidity
A Current Ratio of 0.42 indicates that AEP may have some problems paying its short term obligations.
AEP has a worse Current ratio (0.42) than 89.36% of its industry peers.
AEP has a Quick Ratio of 0.42. 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 Quick ratio (0.31) than 89.36% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.31 |
3. Growth
3.1 Past
AEP shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.89%, which is quite good.
The Earnings Per Share has been growing slightly by 5.71% on average over the past years.
AEP shows a small growth in Revenue. In the last year, the Revenue has grown by 4.35%.
The Revenue has been growing slightly by 4.85% on average over the past years.
EPS 1Y (TTM)8.89%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%21.26%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%8.71%
3.2 Future
AEP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.00% yearly.
AEP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.09% yearly.
EPS Next Y5.62%
EPS Next 2Y6.39%
EPS Next 3Y6.79%
EPS Next 5Y7%
Revenue Next Year4.65%
Revenue Next 2Y4.09%
Revenue Next 3Y3.93%
Revenue Next 5Y4.09%
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 stable.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 17.91, AEP is valued on the expensive side.
The rest of the industry has a similar Price/Earnings ratio as AEP.
AEP's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.30.
The Price/Forward Earnings ratio is 16.59, which indicates a correct valuation of AEP.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AEP is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 21.76. AEP is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.91 | ||
| Fwd PE | 16.59 |
4.2 Price Multiples
AEP's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. AEP is more expensive than 63.83% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.37 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates AEP does not grow enough to justify the current Price/Earnings ratio.
PEG (NY)3.19
PEG (5Y)3.14
EPS Next 2Y6.39%
EPS Next 3Y6.79%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.58%, AEP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.63, AEP pays a bit more dividend than its industry peers.
AEP's Dividend Yield is rather good when compared to the S&P500 average which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.58% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.62%
Div Incr Years15
Div Non Decr Years20
5.3 Sustainability
AEP pays out 70.11% of its income as dividend. This is not a sustainable payout ratio.
AEP's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP70.11%
EPS Next 2Y6.39%
EPS Next 3Y6.79%
105.34
-0.7 (-0.66%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners85.86%
Inst Owner Change0%
Ins Owners0.02%
Ins Owner Change12.25%
Market Cap56.25B
Analysts69.6
Price Target111.88 (6.21%)
Short Float %3.93%
Short Ratio7.01
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.58% |
Yearly Dividend3.6
Dividend Growth(5Y)5.62%
DP70.11%
Div Incr Years15
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)3.88%
Min EPS beat(2)-1.19%
Max EPS beat(2)8.95%
EPS beat(4)3
Avg EPS beat(4)2.45%
Min EPS beat(4)-1.19%
Max EPS beat(4)8.95%
EPS beat(8)5
Avg EPS beat(8)1.17%
EPS beat(12)7
Avg EPS beat(12)1.32%
EPS beat(16)10
Avg EPS beat(16)1.29%
Revenue beat(2)1
Avg Revenue beat(2)-0.29%
Min Revenue beat(2)-5.22%
Max Revenue beat(2)4.64%
Revenue beat(4)1
Avg Revenue beat(4)-1.63%
Min Revenue beat(4)-5.22%
Max Revenue beat(4)4.64%
Revenue beat(8)1
Avg Revenue beat(8)-3.52%
Revenue beat(12)4
Avg Revenue beat(12)2.99%
Revenue beat(16)7
Avg Revenue beat(16)2.96%
PT rev (1m)2.29%
PT rev (3m)4.6%
EPS NQ rev (1m)-0.73%
EPS NQ rev (3m)-4.83%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)-0.29%
Revenue NQ rev (1m)-2.37%
Revenue NQ rev (3m)-5.14%
Revenue NY rev (1m)-0.15%
Revenue NY rev (3m)-0.04%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.91 | ||
| Fwd PE | 16.59 | ||
| P/S | 2.79 | ||
| P/FCF | N/A | ||
| P/OCF | 8.26 | ||
| P/B | 2.06 | ||
| P/tB | 2.06 | ||
| EV/EBITDA | 12.37 |
EPS(TTM)5.88
EY5.58%
EPS(NY)6.35
Fwd EY6.03%
FCF(TTM)-2.43
FCFYN/A
OCF(TTM)12.76
OCFY12.11%
SpS37.75
BVpS51.25
TBVpS51.15
PEG (NY)3.19
PEG (5Y)3.14
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.65% | ||
| ROE | 10.1% | ||
| ROCE | 5.06% | ||
| ROIC | 3.85% | ||
| ROICexc | 3.87% | ||
| ROICexgc | 3.87% | ||
| OM | 22.61% | ||
| PM (TTM) | 13.71% | ||
| GM | 69.18% | ||
| 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-Score5
Asset Turnover0.19
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.54 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.27 | ||
| Cap/Depr | 235.85% | ||
| Cap/Sales | 40.24% | ||
| Interest Coverage | 2.5 | ||
| Cash Conversion | 85.19% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.42 | ||
| Quick Ratio | 0.31 | ||
| Altman-Z | 0.87 |
F-Score5
WACC6.48%
ROIC/WACC0.59
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)8.89%
EPS 3Y5.78%
EPS 5Y5.71%
EPS Q2Q%21.26%
EPS Next Y5.62%
EPS Next 2Y6.39%
EPS Next 3Y6.79%
EPS Next 5Y7%
Revenue 1Y (TTM)4.35%
Revenue growth 3Y5.51%
Revenue growth 5Y4.85%
Sales Q2Q%8.71%
Revenue Next Year4.65%
Revenue Next 2Y4.09%
Revenue Next 3Y3.93%
Revenue Next 5Y4.09%
EBIT growth 1Y11.43%
EBIT growth 3Y9.11%
EBIT growth 5Y10.1%
EBIT Next Year84.62%
EBIT Next 3Y30.03%
EBIT Next 5Y21.57%
FCF growth 1Y52.98%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y55.4%
OCF growth 3Y21.01%
OCF growth 5Y9.77%