AEP Key Financial Metrics & Ratios

Summary

Business

Earnings Call

Valuation

Profitability

Financial Health

10Y annualized return is positive but below market average at 6.5% per year

AEP has met or exceeded earnings expectations in some recent quarters (6/10)

Moderate P/E Ratio

Reasonable Price-to-Sales Ratio

Strong Gross Profit Margin

Good Operating and Net Profit Margins

Manageable Interest Coverage

Strong Earnings Growth

Robust Capital Plan

Strategic Transactions

Data Center Load Growth

Innovative Solutions and Technology

Regulatory Engagement and Support

High EV/EBITDA Ratio

Negative P/FCF Ratio

Moderate Return on Equity

High Debt Levels

Low Liquidity Ratios

Overall, American Electric Power Company showcases a strong business model with solid financial performance and a comprehensive capital plan. The future looks promising with significant growth opportunities driven by data center demand and innovative energy solutions. The company's proactive regulatory engagement and strategic transactions further enhance its position, indicating a well-rounded approach to achieving long-term goals.

Analysis Date: February 13, 2025
Last Updated: March 11, 2025

+88%

+6.5% per year

Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.

Country US

Exchange NASDAQ

Industry Regulated Electric

Sector Utilities

Market Cap $48.47B

CEO Mr. William J. Fehrman

American Electric Power Company, Inc. (AEP) is a company that provides electricity to homes and businesses across the United States. They generate power using different sources like coal, natural gas, nuclear, and renewable energy like wind and solar. AEP not only sells electricity directly to customers but also supplies it to other companies and communities. Founded in 1906 and based in Columbus, Ohio, AEP plays a vital role in keeping the lights on for millions of people.

Core Products

⚡

Electricity Generation Power generation from diverse sources

📈

Wholesale Power Supply Selling power to utilities

🏠

Electricity Distribution Delivering power to homes

🔌

Electricity Transmission High voltage electricity transport

Business Type

Business to Business

Competitive Advantages

🛡️

Regulatory Protection As a regulated utility, AEP benefits from stable revenue streams and protection from competition, allowing for predictable earnings.

👥

Customer Base and Scale AEP serves millions of customers across multiple states, leveraging economies of scale for operational efficiency and cost management.

🔋

Diverse Energy Portfolio AEP's utilization of various energy sources, including renewables, positions it well for changing market demands and environmental regulations.

🏗️

Established Infrastructure The extensive transmission and distribution network built over decades provides a significant barrier to entry for new competitors.

💡

Innovative Technology Integration Investment in smart grid technology enhances service reliability and operational efficiency, further solidifying AEP's market position.

Key Business Risks

📉

Market Volatility Fluctuations in energy prices can affect revenue and margins, particularly in wholesale markets.

🌍

Environmental Impact Increased scrutiny and regulations regarding emissions may require costly upgrades and investments.

⚖️

Regulatory Compliance Changes in regulations and policies can impact operational costs and profitability.

⚡

Technological Changes Rapid advancements in energy technology may require significant investment to remain competitive.

🔗

Supply Chain Disruptions Dependence on various energy sources exposes the company to risks from supply chain disruptions.

Looking for Stocks with Positive Earnings Momentum? Check Out These 2 Utilities Names

Investors looking for ways to find stocks that are set to beat quarterly earnings estimates should check out the Zacks Earnings ESP.

AEP Stock Rides on Investments & Renewable Portfolio Expansion

AEP continues to benefit from its systematic investment plan and renewable portfolio expansion initiatives.

5 Nuclear Energy Stocks in Focus Amid AI-Powered Data Center Growth

Watch five nuclear energy stocks amid massive power demand. These are: CEG, BWXT, PCG, AEP, NEE.

Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.

Graham Value Metrics

Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.

Intrinsic Value

Estimated fair value based on Graham's formula

$127.60

Current Market Price: $105.25

IV/P Ratio: 1.21x (>1.0 indicates undervalued)

Margin of Safety

Gap between intrinsic value and market price

18.0%

Graham recommended a minimum of 20-30% margin of safety

Higher values indicate a greater potential discount to fair value

Graham Criteria Checklist

Benjamin Graham's value investing checklist for AEP

Positive earnings (5+ years)

Dividend history (5+ years)

P/E ratio ≤ 20 (18.67)

P/B ratio ≤ 1.5 (2.06)

Current ratio ≥ 2.0 (0.44x)

Long-term debt < Net current assets (-5.51x)

Margin of safety (18.0%)

AEP does not meet all Graham criteria

Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.

Strong Gross Profit Margin

56.59%

Gross Profit Margin

A gross profit margin of 56.59% indicates efficient management of production costs relative to sales, suggesting good profitability potential.

Good Operating and Net Profit Margins

22.74%

Operating Profit Margin

14.93%

Net Profit Margin

Operating profit margin of 22.74% and net profit margin of 14.93% reflect strong operational efficiency and effective cost management.

Moderate Return on Equity

11.19%

Return on Equity

The return on equity (ROE) of 11.19% is decent but could be improved, indicating that there may be room for better capital efficiency.

About Profitability Metrics

Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.

Return on Equity (ROE)

Measures how efficiently a company uses its equity to generate profits

11.25%

10% 15%

Higher values indicate better returns for shareholders

TTM (as of 2025-04-25)

Gross Profit Margin

Percentage of revenue retained after accounting for cost of goods sold

63.18%

20% 40%

Higher values indicate better efficiency in production

TTM (as of 2025-04-25)

Net Profit Margin

Percentage of revenue retained after accounting for all expenses

15.05%

8% 15%

Higher values indicate better overall profitability

TTM (as of 2025-04-25)

Manageable Interest Coverage

2.41

Interest Coverage Ratio

An interest coverage ratio of 2.41 suggests that AEP generates sufficient operating income to cover its interest expenses, indicating reasonable creditworthiness.

High Debt Levels

1.70

Debt-to-Equity Ratio

0.44

Debt-to-Assets Ratio

A debt-to-equity ratio of 1.70 and a debt-to-assets ratio of 0.44 indicate that AEP has a relatively high level of debt, which could pose risks in economic downturns.

Low Liquidity Ratios

0.44

Current Ratio

0.31

Quick Ratio

Both the current ratio (0.44) and quick ratio (0.31) are below 1, indicating potential liquidity issues and an inability to cover short-term liabilities.

About Financial Health Metrics

Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.

Debt to Equity Ratio

Total debt divided by total equity

1.70x

1.0x 2.0x

Lower values indicate less financial leverage and risk

Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk

Q4 2024

Current Ratio

Current assets divided by current liabilities

0.44x

1.0x 2.0x

Higher values indicate better short-term liquidity

Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good

Q4 2024

Meeting Expectations

6 /10

Higher values indicate better execution and credibility

Strong Earnings Growth

$5.62

Operating Earnings per Share 2024

Year-over-Year Earnings Growth

AEP reported a significant growth in operating earnings, with $5.62 per share for the full year 2024, which is a 7% increase from the previous year. This demonstrates a solid financial performance and commitment to delivering shareholder value.

Robust Capital Plan

$54 billion

Capital Plan Amount

AEP has a robust $54 billion capital plan set for 2025-2029, which is focused on enhancing infrastructure and meeting growing energy demand. This plan is supported by strong customer commitments, indicating confidence in future growth.

Strategic Transactions

$2.82 billion

Transaction Value

95%

Retained Asset Percentage

The company successfully executed a minority interest transaction for $2.82 billion which is highly accretive and allows for further investments while maintaining control over the majority of its assets.

No weaknesses identified.

Data Center Load Growth

20 gigawatts

Incremental Load by 2030

12.3%

Commercial Load Growth 2024

AEP is aggressively pursuing data center loads, anticipating customer commitments that will lead to the addition of 20 gigawatts of incremental load by 2030. This is expected to drive significant revenue growth.

Innovative Solutions and Technology

100 megawatts

Fuel Cell Project Capacity

SMR Sites Considered

AEP is exploring partnerships for innovative solutions, such as fuel cells and small modular reactors (SMRs), to meet future energy demands and enhance customer resilience. This positions the company as a forward-thinking leader in the energy sector.

Regulatory Engagement and Support

Multiple

States with Positive Regulatory Outcomes

AEP has demonstrated strong engagement with regulators across its service areas, resulting in positive regulatory outcomes that support its financial and operational strategies.

No risks identified.