119.43 USD
+1.41 (+1.19%)
119.05 USD
-0.38 (-0.32%)
AEP gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 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. 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.
- AEP had positive earnings in each of the past 5 years.
- In the past 5 years AEP always reported a positive cash flow from operatings.
1.2 Ratios
- Looking at the Return On Assets, with a value of 3.32%, AEP is in the better half of the industry, outperforming 73.91% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 12.03%, AEP is in the better half of the industry, outperforming 65.22% of the companies in the same industry.
- With a Return On Invested Capital value of 4.13%, AEP perfoms like the industry average, 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
- Looking at the Profit Margin, with a value of 17.23%, AEP belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
- In the last couple of years the Profit Margin of AEP has grown nicely.
- Looking at the Operating Margin, with a value of 24.93%, AEP is in the better half of the industry, outperforming 67.39% of the companies in the same industry.
- In the last couple of years the Operating Margin of AEP has grown nicely.
- Looking at the Gross Margin, with a value of 68.45%, AEP is in line with its industry, outperforming 58.70% of the companies in the same industry.
- In the last couple of years the Gross Margin of AEP has declined.
| 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.
- AEP has a better debt/assets ratio than last year.
2.2 Solvency
- Based on the Altman-Z score of 0.99, we must say that AEP is in the distress zone and has some risk of bankruptcy.
- AEP has a Altman-Z score of 0.99. This is in the better half of the industry: AEP outperforms 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 | 0.99 |
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.
- With a Current ratio value of 0.69, AEP is not doing good in the industry: 76.09% of the companies in the same industry are doing better.
- 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.
- 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
- AEP shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.32%.
- AEP shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.71% yearly.
- 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
- 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.
- AEP is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.46% yearly.
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 19.87, the valuation of AEP can be described as rather expensive.
- AEP's Price/Earnings ratio is in line with the industry average.
- AEP's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.87.
- A Price/Forward Earnings ratio of 18.70 indicates a rather expensive valuation of AEP.
- AEP's Price/Forward Earnings is on the same level as the industry average.
- The average S&P500 Price/Forward Earnings ratio is at 25.96. AEP is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.87 | ||
| Fwd PE | 18.7 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, AEP is valued a bit more expensive than the industry average as 60.87% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.24 |
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.
- The decent profitability rating of AEP may justify a higher PE ratio.
PEG (NY)3.05
PEG (5Y)3.48
EPS Next 2Y6.69%
EPS Next 3Y7.04%
5. Dividend
5.1 Amount
- AEP has a Yearly Dividend Yield of 3.24%.
- Compared to an average industry Dividend Yield of 2.90, AEP has a dividend in line with its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.82, AEP pays a better dividend.
| 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 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
- 54.46% of the earnings are spent on dividend by AEP. 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 2Y6.69%
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.