AMERICAN ELECTRIC POWER (AEP) Stock Fundamental Analysis
NASDAQ:AEP - Nasdaq - US0255371017 - Common Stock - Currency: USD
We assign a fundamental rating of 3 out of 10 to AEP. AEP was compared to 46 industry peers in the Electric Utilities industry. While AEP is still in line with the averages on profitability rating, there are concerns on its financial health. AEP is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year AEP was profitable.
AEP had a positive operating cash flow in the past year.
Each year in the past 5 years AEP has been profitable.
In the past 5 years AEP always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of AEP (2.64%) is comparable to the rest of the industry.
AEP has a Return On Equity of 9.89%. This is in the better half of the industry: AEP outperforms 62.16% of its industry peers.
The Return On Invested Capital of AEP (3.50%) is worse than 64.86% of 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 4.60%.
The last Return On Invested Capital (3.50%) for AEP is above the 3 year average (3.45%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.64% | ||
| ROE | 9.89% | ||
| ROIC | 3.5% |
ROA(3y)2.53%
ROA(5y)2.57%
ROE(3y)9.81%
ROE(5y)9.98%
ROIC(3y)3.45%
ROIC(5y)3.35%
1.3 Margins
The Profit Margin of AEP (13.46%) is comparable to the rest of the industry.
In the last couple of years the Profit Margin of AEP has remained more or less at the same level.
AEP has a Operating Margin (20.61%) which is comparable to the rest of the industry.
AEP's Operating Margin has improved in the last couple of years.
AEP has a Gross Margin (67.89%) which is comparable to the rest of the industry.
AEP's Gross Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 20.61% | ||
| PM (TTM) | 13.46% | ||
| GM | 67.89% |
OM growth 3Y-0.59%
OM growth 5Y2.96%
PM growth 3Y-7.6%
PM growth 5Y-0.42%
GM growth 3Y-6.66%
GM growth 5Y-3.69%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AEP is destroying value.
Compared to 1 year ago, AEP has more shares outstanding
The number of shares outstanding for AEP has been increased compared to 5 years ago.
Compared to 1 year ago, AEP has a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.91, we must say that AEP is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 0.91, AEP is in line with its industry, outperforming 54.05% of the companies in the same industry.
A Debt/Equity ratio of 1.53 is on the high side and indicates that AEP has dependencies on debt financing.
AEP has a Debt to Equity ratio (1.53) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.53 | ||
| Debt/FCF | N/A | ||
| Altman-Z | 0.91 |
ROIC/WACC0.54
WACC6.52%
2.3 Liquidity
AEP has a Current Ratio of 0.57. 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 Current ratio of AEP (0.57) is worse than 83.78% of its industry peers.
A Quick Ratio of 0.41 indicates that AEP may have some problems paying its short term obligations.
AEP has a Quick ratio of 0.41. This is amonst the worse of the industry: AEP underperforms 86.49% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.57 | ||
| Quick Ratio | 0.41 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 10.67% over the past year.
AEP shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.81% yearly.
Looking at the last year, AEP shows a small growth in Revenue. The Revenue has grown by 1.63% in the last year.
AEP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.23% yearly.
EPS 1Y (TTM)10.67%
EPS 3Y5.68%
EPS 5Y5.81%
EPS Q2Q%4.52%
Revenue 1Y (TTM)1.63%
Revenue growth 3Y8.36%
Revenue growth 5Y3.23%
Sales Q2Q%1.09%
3.2 Future
AEP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.51% yearly.
Based on estimates for the next years, AEP will show a small growth in Revenue. The Revenue will grow by 4.93% on average per year.
EPS Next Y8.1%
EPS Next 2Y6.46%
EPS Next 3Y6.69%
EPS Next 5Y6.51%
Revenue Next Year2.63%
Revenue Next 2Y3.57%
Revenue Next 3Y3.29%
Revenue Next 5Y4.93%
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 stable.
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 18.19, AEP is valued on the expensive side.
The rest of the industry has a similar Price/Earnings ratio as AEP.
AEP is valuated rather cheaply when we compare the Price/Earnings ratio to 29.39, which is the current average of the S&P500 Index.
AEP is valuated rather expensively with a Price/Forward Earnings ratio of 17.16.
AEP's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of AEP to the average of the S&P500 Index (94.38), we can say AEP is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.19 | ||
| Fwd PE | 17.16 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AEP indicates a slightly more expensive valuation: AEP is more expensive than 64.86% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | N/A | ||
| EV/EBITDA | 12.95 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
PEG (NY)2.25
PEG (5Y)3.13
EPS Next 2Y6.46%
EPS Next 3Y6.69%
5. Dividend
5.1 Amount
AEP has a Yearly Dividend Yield of 3.71%.
AEP's Dividend Yield is a higher than the industry average which is at 3.59.
Compared to an average S&P500 Dividend Yield of 2.30, AEP pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.71% |
5.2 History
The dividend of AEP has a limited annual growth rate of 5.83%.
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)5.83%
Div Incr Years15
Div Non Decr Years20
5.3 Sustainability
71.01% of the earnings are spent on dividend by AEP. This is not a sustainable payout ratio.
AEP's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP71.01%
EPS Next 2Y6.46%
EPS Next 3Y6.69%
AMERICAN ELECTRIC POWER
NASDAQ:AEP (2/11/2025, 8:04:23 PM)
After market: 101.88 0 (0%)101.88
+1.05 (+1.04%)
Chartmill FA Rating
GICS SectorUtilities
GICS IndustryGroupUtilities
GICS IndustryElectric Utilities
Earnings (Last)
Earnings (Next)
Inst Owners79.36%
Inst Owner Change-12.38%
Ins Owners0.04%
Ins Owner Change1.86%
Market Cap54.26B
Analysts70.4
Price Target102.59 (0.7%)
Short Float %1.79%
Short Ratio3.32
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.71% |
Yearly Dividend3.38
Dividend Growth(5Y)5.83%
DP71.01%
Div Incr Years15
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)1.02%
Min EPS beat(2)0.38%
Max EPS beat(2)1.65%
EPS beat(4)3
Avg EPS beat(4)-0.21%
Min EPS beat(4)-3.24%
Max EPS beat(4)1.65%
EPS beat(8)5
Avg EPS beat(8)0.68%
EPS beat(12)8
Avg EPS beat(12)1.08%
EPS beat(16)10
Avg EPS beat(16)1.22%
Revenue beat(2)0
Avg Revenue beat(2)-2.97%
Min Revenue beat(2)-4.32%
Max Revenue beat(2)-1.62%
Revenue beat(4)0
Avg Revenue beat(4)-4.57%
Min Revenue beat(4)-11.43%
Max Revenue beat(4)-0.89%
Revenue beat(8)1
Avg Revenue beat(8)1.08%
Revenue beat(12)5
Avg Revenue beat(12)3.79%
Revenue beat(16)7
Avg Revenue beat(16)2.55%
PT rev (1m)-0.17%
PT rev (3m)-1.83%
EPS NQ rev (1m)-2.89%
EPS NQ rev (3m)-4.66%
EPS NY rev (1m)-0.26%
EPS NY rev (3m)-0.24%
Revenue NQ rev (1m)0.8%
Revenue NQ rev (3m)-2.92%
Revenue NY rev (1m)0.6%
Revenue NY rev (3m)0.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.19 | ||
| Fwd PE | 17.16 | ||
| P/S | 2.77 | ||
| P/FCF | N/A | ||
| P/OCF | 8.46 | ||
| P/B | 2.03 | ||
| P/tB | 2.04 | ||
| EV/EBITDA | 12.95 |
EPS(TTM)5.6
EY5.5%
EPS(NY)5.94
Fwd EY5.83%
FCF(TTM)-1
FCFYN/A
OCF(TTM)12.04
OCFY11.82%
SpS36.81
BVpS50.1
TBVpS50
PEG (NY)2.25
PEG (5Y)3.13
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.64% | ||
| ROE | 9.89% | ||
| ROCE | 4.52% | ||
| ROIC | 3.5% | ||
| ROICexc | 3.52% | ||
| ROICexgc | 3.52% | ||
| OM | 20.61% | ||
| PM (TTM) | 13.46% | ||
| GM | 67.89% | ||
| FCFM | N/A |
ROA(3y)2.53%
ROA(5y)2.57%
ROE(3y)9.81%
ROE(5y)9.98%
ROIC(3y)3.45%
ROIC(5y)3.35%
ROICexc(3y)3.47%
ROICexc(5y)3.37%
ROICexgc(3y)3.47%
ROICexgc(5y)3.37%
ROCE(3y)4.54%
ROCE(5y)4.4%
ROICexcg growth 3Y1.31%
ROICexcg growth 5Y-0.88%
ROICexc growth 3Y1.32%
ROICexc growth 5Y-0.88%
OM growth 3Y-0.59%
OM growth 5Y2.96%
PM growth 3Y-7.6%
PM growth 5Y-0.42%
GM growth 3Y-6.66%
GM growth 5Y-3.69%
F-Score5
Asset Turnover0.2
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.53 | ||
| Debt/FCF | N/A | ||
| Debt/EBITDA | 5.53 | ||
| Cap/Depr | 207.99% | ||
| Cap/Sales | 35.43% | ||
| Interest Coverage | 1.96 | ||
| Cash Conversion | 86.91% | ||
| Profit Quality | N/A | ||
| Current Ratio | 0.57 | ||
| Quick Ratio | 0.41 | ||
| Altman-Z | 0.91 |
F-Score5
WACC6.52%
ROIC/WACC0.54
Cap/Depr(3y)213.22%
Cap/Depr(5y)220.73%
Cap/Sales(3y)36.12%
Cap/Sales(5y)38.03%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)10.67%
EPS 3Y5.68%
EPS 5Y5.81%
EPS Q2Q%4.52%
EPS Next Y8.1%
EPS Next 2Y6.46%
EPS Next 3Y6.69%
EPS Next 5Y6.51%
Revenue 1Y (TTM)1.63%
Revenue growth 3Y8.36%
Revenue growth 5Y3.23%
Sales Q2Q%1.09%
Revenue Next Year2.63%
Revenue Next 2Y3.57%
Revenue Next 3Y3.29%
Revenue Next 5Y4.93%
EBIT growth 1Y8.35%
EBIT growth 3Y7.72%
EBIT growth 5Y6.28%
EBIT Next Year88.9%
EBIT Next 3Y30.73%
EBIT Next 5Y19.77%
FCF growth 1Y37.71%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y14.52%
OCF growth 3Y9.35%
OCF growth 5Y-0.82%