Earnings Beat: American Electric Power Company, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

American Electric Power Company, Inc. (NASDAQ:AEP) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.4% to hit US$5.1b. American Electric Power Company also reported a statutory profit of US$2.29, which was an impressive 84% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Following the latest results, American Electric Power Company's 15 analysts are now forecasting revenues of US$21.5b in 2025. This would be a satisfactory 3.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to reduce 9.5% to US$6.17 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$21.3b and earnings per share (EPS) of US$5.86 in 2025. So the consensus seems to have become somewhat more optimistic on American Electric Power Company's earnings potential following these results.

View our latest analysis for American Electric Power Company

The consensus price target was unchanged at US$114, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values American Electric Power Company at US$125 per share, while the most bearish prices it at US$108. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting American Electric Power Company's growth to accelerate, with the forecast 7.8% annualised growth to the end of 2025 ranking favourably alongside historical growth of 6.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.7% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect American Electric Power Company to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards American Electric Power Company following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on American Electric Power Company. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for American Electric Power Company going out to 2027, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for American Electric Power Company (1 is significant!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.