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American Electric Power Company, Inc. (AEP)
:AEP
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American Electric Power
(NASDAQ:AEP)
Rating:69Neutral
Price Target:
$113.00
â–²(9.69%Upside)
Positive Factors
Earnings and Financial Performance
AEP reported GAAP EPS of $1.50 and operating EPS of $1.54 compared to consensus/BofA estimates of $1.39.
Equity and Financial Strategy
The transaction positively removes the equity/credit overhang on the stock, with management maintaining its long-term financial outlook.
Strategic Investments
The company's growth outlook is driven by an investment program focused on supply decarbonization and transmission, supporting a premium valuation over time.
Negative Factors
Regulatory Risks
Management’s view of pending Ohio legislation will be key given significant changes to the regulatory compact and a ~$0.07/sh on paper EPS headwind from foregone OVEC payments.
Sales Performance
1Q25 YoY weather normalized sales was again below plan (1.8% decline versus 2025e guidance for 0.7% residential sales growth).
American Electric Power (AEP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$54.42B
Dividend Yield3.65%
Average Volume (3M)2.87M
Price to Earnings (P/E)19.7
Beta (1Y)0.12
Revenue Growth4.20%
EPS Growth-3.64%
CountryUS
Employees16,330
SectorUtilities
Sector Strength80
IndustryRegulated Electric
Share Statistics
EPS (TTM)1.54
Shares Outstanding534,195,000
10 Day Avg. Volume2,430,875
30 Day Avg. Volume2,867,651
Financial Highlights & Ratios
PEG Ratio-2.28
Price to Book (P/B)2.03
Price to Sales (P/S)0.00
P/FCF Ratio-32.74
Enterprise Value/Market Cap1.63
Enterprise Value/Revenue1.12
Enterprise Value/Gross Profit7.01
Enterprise Value/Ebitda2.89
Forecast
1Y Price Target
$111.38Price Target Upside8.11% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
American Electric Power Business Overview & Revenue Model
Company DescriptionAmerican Electric Power (AEP) is one of the largest electric utilities in the United States, delivering electricity to more than five million customers across 11 states. Headquartered in Columbus, Ohio, AEP operates an extensive network of power generation assets, including coal, natural gas, nuclear, hydroelectric, and renewable energy sources. The company is organized into various segments such as Vertically Integrated Utilities, Transmission and Distribution Utilities, and AEP Transmission Holdco, serving a diverse range of customers from residential to large industrial clients.
How the Company Makes MoneyAmerican Electric Power generates revenue primarily through the sale of electricity to its customers. The company's Vertically Integrated Utilities segment earns income by owning and operating power plants, and then selling the generated electricity to residential, commercial, and industrial customers. AEP also makes money through its Transmission and Distribution Utilities segment, which involves the delivery of electricity across its vast network of transmission lines. Additionally, AEP Transmission Holdco contributes to revenue by developing and operating transmission projects that enhance the reliability of the power grid. Some of AEP's earnings are also derived from its investments in renewable energy projects and partnerships with other utility companies to expand its transmission capabilities. Regulatory frameworks and approved rate structures by state utility commissions further influence the company's revenue generation.
American Electric Power Key Performance Indicators (KPIs)
Any
Retail Electric
Measures performance in the retail electricity market, highlighting customer base size, pricing strategies, and market competitiveness, which are crucial for revenue stability and growth.
Measures performance in the retail electricity market, highlighting customer base size, pricing strategies, and market competitiveness, which are crucial for revenue stability and growth.
Data provided by:
Main Street Data
Main Street DataAmerican Electric Power Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: -3.26%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and significant growth opportunities, particularly in commercial and industrial segments. AEP has secured regulatory and legislative successes that bolster its long-term strategy. While there are some challenges, such as the decline in residential load and the impact of legislative changes on OVEC cost recovery, the overall outlook remains positive due to robust growth and strategic investments.Q1-2025 Updates
Positive Updates
Strong First Quarter Financial Performance
American Electric Power announced first quarter 2025 operating earnings of $1.54 per share or $823 million, which is a 20% increase compared to the same period last year. The company reaffirmed its 2025 operating earnings guidance range of $5.75 to $5.95 per share and a long-term operating earnings growth rate of 6% to 8%.
Significant Load Growth
AEP's commercial load grew 12.3% in the first quarter of 2025 compared to the first quarter of last year. The company expects annual retail load growth of between 8% and 9% through 2027, largely driven by data center demand and industrial loads.
Regulatory and Legislative Successes
AEP reported a number of positive regulatory outcomes, including commission approvals for large load tariffs in Indiana, Kentucky, and West Virginia, and the passage of Ohio House Bill 15, which supports capital investment growth and customer benefits.
Major Investment Plans
AEP has committed to a $54 billion capital plan over the next five years, with potential incremental investments of up to $10 billion to support increasing electric demand. The company has already secured its equity needs through 2029.
Negative Updates
Residential Load Decline
AEP reported a decline in residential sales, which is being offset by an increase in C&I sales. The decrease is attributed to efficiency improvements and reduced throughput in residential sectors.
OVEC Cost Recovery Impact
Due to Ohio House Bill 15, AEP recorded a $28 million charge related to the write-off of previously deferred OVEC costs. The change in legislation will end the cost recovery, impacting future earnings by less than $10 million annually.
Company Guidance
During the American Electric Power (AEP) First Quarter 2025 Earnings Call, the company provided guidance on several key metrics. AEP reported operating earnings of $1.54 per share or $823 million for the first quarter, reaffirming their 2025 operating earnings guidance range of $5.75 to $5.95 per share and a long-term operating earnings growth rate of 6% to 8%. The company is committed to a $54 billion capital plan over the next five years, with potential for up to $10 billion in additional investments. AEP's total retail load growth is projected to reach 8% to 9% annually through 2027, driven by commercial customers, particularly in data centers and industrial sectors. Commercial load grew by 12.3% compared to the first quarter of the previous year. The company highlighted that approximately 80% of their rate-related revenue is secured for 2025, and they have completed anticipated equity needs through 2029 following a successful $2.3 billion forward equity issuance. AEP's credit metrics include an FFO to debt ratio of 13.2%, expected to improve by 40 to 60 basis points upon closing a minority equity interest investment. The company targets a 10% to 12% total annual shareholder return and remains focused on executing their growth strategy while maintaining financial discipline.American Electric Power Financial Statement Overview
Summary
AEP shows strong revenue growth and operational efficiency, with stable profitability despite a slight decline in net profit margins. The balance sheet reflects high industry-typical leverage and a solid equity position. Robust cash flows are present, though negative free cash flow highlights the need for careful capital expenditure management.Income Statement
The company's income statement shows a stable gross profit margin of approximately 62.6% TTM, indicating strong cost management. The net profit margin is 13.7% TTM, slightly below the previous annual figure of 15.0%, suggesting a minor decline in profitability. Revenue growth has been positive, with a 6.2% increase from 2023 to 2024 and a 2.2% TTM increase, reflecting steady demand and operational performance. EBIT and EBITDA margins TTM were 21.9% and 36.0%, respectively, reflecting efficient operations despite a slight decrease in net income.75
Positive
Balance Sheet
The balance sheet displays a relatively high debt-to-equity ratio of 1.72 TTM, suggesting significant leverage but typical for the utility industry. The equity ratio is stable at 26.2% TTM, demonstrating a balanced capital structure. Return on equity (ROE) is 10.1% TTM, indicating moderate profitability. The company maintains adequate liquidity with sufficient cash reserves, though there is an upward trend in total debt levels.70
Positive
Cash Flow
The cash flow statement reveals a robust operating cash flow to net income ratio of 2.46 TTM, indicating strong cash generation capabilities. However, the free cash flow has turned negative TTM, primarily due to significant capital expenditures, which suggests potential constraints in excess cash. Free cash flow growth rate shows volatility, as it turned negative from a positive annual figure, highlighting potential challenges in sustaining free cash flow.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 20.16B | 19.72B | 18.98B | 19.64B | 16.79B | 14.92B | Gross Profit |
| 12.62B | 12.46B | 11.13B | 11.29B | 10.20B | 9.54B | EBIT |
| 4.42B | 4.30B | 3.56B | 3.48B | 3.41B | 2.99B | EBITDA |
| 7.26B | 8.10B | 7.20B | 7.10B | 6.76B | 6.22B | Net Income Common Stockholders |
| 2.76B | 2.97B | 2.21B | 2.31B | 2.49B | 2.20B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 463.60M | 418.30M | 544.40M | 696.90M | 623.80M | 593.50M | Total Assets |
| 104.39B | 105.73B | 96.68B | 93.47B | 87.67B | 80.76B | Total Debt |
| 46.93B | 45.76B | 43.61B | 40.40B | 36.66B | 34.43B | Net Debt |
| 46.67B | 45.56B | 43.28B | 39.89B | 36.26B | 34.04B | Total Liabilities |
| 77.03B | 76.09B | 71.40B | 69.35B | 64.99B | 59.98B | Stockholders Equity |
| 27.32B | 26.94B | 25.25B | 23.89B | 22.43B | 20.55B |
| Cash Flow | Free Cash Flow | ||||
| -1.30B | 6.66B | -2.49B | -1.48B | -1.92B | -2.48B | Operating Cash Flow |
| 6.81B | 6.80B | 5.01B | 5.29B | 3.84B | 3.83B | Investing Cash Flow |
| -8.03B | -7.60B | -6.27B | -7.75B | -6.43B | -6.23B | Financing Cash Flow |
| 1.23B | 659.20M | 1.08B | 2.57B | 2.61B | 2.41B |
American Electric Power Technical Analysis
Positive
103.02
Price Trends
103.83
Negative
102.91
Positive
99.18
Positive
Market Momentum
-0.47
Negative
51.06
Neutral
52.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AEP, the sentiment is Positive. The current price of 103.02 is above the 20-day moving average (MA) of 102.50, below the 50-day MA of 103.83, and above the 200-day MA of 99.18, indicating a neutral trend. The MACD of -0.47 indicates Negative momentum. The RSI at 51.06 is Neutral, neither overbought nor oversold. The STOCH value of 52.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AEP.
American Electric Power Risk Analysis
American Electric Power disclosed 45 risk factors in its most recent earnings report. American Electric Power reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Electric Power Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $47.39B | 20.85 | 8.22% | 4.80% | 3.62% | 40.33% | |
73 Outperform | $43.33B | 15.92 | 10.10% | 3.73% | 6.71% | 16.09% | |
73 Outperform | $69.30B | 18.11 | 8.31% | 5.75% | -3.25% | -76.46% | |
72 Outperform | $90.42B | 19.40 | 9.48% | 3.59% | 5.02% | 45.08% | |
69 Neutral | $54.42B | 19.65 | 10.41% | 3.65% | 4.20% | -3.64% | |
69 Neutral | $98.15B | 21.41 | 14.01% | 3.31% | 9.58% | 8.02% | |
64 Neutral | $8.55B | 10.42 | 4.24% | 4.64% | 4.05% | -13.04% |
* Utilities Sector Average
Performance Comparison
AEP
American Electric Power
103.02
18.31
21.61%
D
Dominion Energy
55.91
7.55
15.61%
DUK
Duke Energy
117.28
19.70
20.19%
EXC
Exelon
43.64
9.56
28.05%
NGG
National Grid Transco
72.82
19.12
35.61%
SO
Southern Co
90.36
14.25
18.72%
American Electric Power Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
American Electric Power Finalizes $2.82 Billion Partnership
Positive
Jun 9, 2025
On June 5, 2025, American Electric Power (AEP) finalized a strategic partnership with KKR and PSP Investments, resulting in a $2.82 billion investment for a 19.9% equity interest in AEP’s Ohio and Indiana Michigan transmission companies. This transaction, initially announced in January 2025, supports AEP’s five-year, $54 billion capital plan and is expected to facilitate infrastructure development to meet the growing energy demand in its service territories. The partnership underscores AEP’s leadership in the transmission sector and aims to enhance grid reliability and service to its customers.
The most recent analyst rating on (AEP) stock is a Buy with a $111.00 price target. To see the full list of analyst forecasts on American Electric Power stock, see the AEP Stock Forecast page.
Executive/Board ChangesBusiness Operations and Strategy
American Electric Power’s CIO Announces Resignation
Neutral
Mar 20, 2025
On March 17, 2025, Therace M. Risch, the Executive Vice President and Chief Information and Technology Officer of American Electric Power Company, Inc., announced her resignation effective April 1, 2025. This leadership change may impact the company’s operations and strategic direction in the technology and information domains.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.