NYSE:AEP

Stock Analysis Report

American Electric Power Company

Executive Summary

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States.

Rewards

PE ratio (22x) is below the Electric Utilities industry average (25x)

Earnings are forecast to grow 7.67% per year

Earnings grew by 8.7% over the past year

Pays a high and reliable dividend of 2.95%

Risk Analysis

Interest payments are not well covered by earnings



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Share Price & News

How has American Electric Power Company's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AEP has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.8%

AEP

2.6%

US Electric Utilities

0.6%

US Market


1 Year Return

29.9%

AEP

27.2%

US Electric Utilities

24.6%

US Market

Return vs Industry: AEP exceeded the US Electric Utilities industry which returned 24.9% over the past year.

Return vs Market: AEP exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

AEPIndustryMarket
7 Day3.8%2.6%0.6%
30 Day7.6%6.2%3.0%
90 Day7.0%5.9%10.6%
1 Year34.0%29.9%31.5%27.2%27.3%24.6%
3 Year78.6%61.2%55.6%40.4%50.5%40.8%
5 Year88.9%58.5%64.8%37.1%78.9%59.1%

Price Volatility Vs. Market

How volatile is American Electric Power Company's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is American Electric Power Company undervalued compared to its fair value and its price relative to the market?

23.38x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: AEP ($94.98) is trading above our estimate of fair value ($68.4)

Significantly Below Fair Value: AEP is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: AEP is good value based on its PE Ratio (22x) compared to the Electric Utilities industry average (25x).

PE vs Market: AEP is poor value based on its PE Ratio (22x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: AEP is poor value based on its PEG Ratio (2.9x)


Price to Book Ratio

PB vs Industry: AEP is overvalued based on its PB Ratio (2.4x) compared to the US Electric Utilities industry average (2.3x).


Next Steps

Future Growth

How is American Electric Power Company forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

7.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AEP's forecast earnings growth (7.7% per year) is above the savings rate (1.7%).

Earnings vs Market: AEP's earnings (7.7% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: AEP's earnings are forecast to grow, but not significantly.

Revenue vs Market: AEP's revenue (3.9% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: AEP's revenue (3.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AEP's Return on Equity is forecast to be low in 3 years time (11%).


Next Steps

Past Performance

How has American Electric Power Company performed over the past 5 years?

5.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AEP has high quality earnings.

Growing Profit Margin: AEP's current net profit margins (13.5%) are higher than last year (12.1%).


Past Earnings Growth Analysis

Earnings Trend: AEP's earnings have grown by 5.9% per year over the past 5 years.

Accelerating Growth: AEP's earnings growth over the past year (8.7%) exceeds its 5-year average (5.9% per year).

Earnings vs Industry: AEP earnings growth over the past year (8.7%) exceeded the Electric Utilities industry 2%.


Return on Equity

High ROE: AEP's Return on Equity (10.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is American Electric Power Company's financial position?


Financial Position Analysis

Short Term Liabilities: AEP's short term assets ($4.2B) do not cover its short term liabilities ($8.6B).

Long Term Liabilities: AEP's short term assets ($4.2B) do not cover its long term liabilities ($45.2B).


Debt to Equity History and Analysis

Debt Level: AEP's debt to equity ratio (141.5%) is considered high.

Reducing Debt: AEP's debt to equity ratio has increased from 111.5% to 141.5% over the past 5 years.

Debt Coverage: AEP's debt is not well covered by operating cash flow (16.3%).

Interest Coverage: AEP's interest payments on its debt are not well covered by EBIT (2.9x coverage).


Balance Sheet

Inventory Level: AEP has a high level of physical assets or inventory.

Debt Coverage by Assets: AEP's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is American Electric Power Company's current dividend yield, its reliability and sustainability?

2.77%

Current Dividend Yield


Dividend Yield vs Market

company2.8%marketbottom25%1.4%markettop25%3.7%industryaverage3.0%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: AEP's dividend (2.95%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: AEP's dividend (2.95%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: AEP's dividends per share have been stable in the past 10 years.

Growing Dividend: AEP's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (62.1%), AEP's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AEP's dividends in 3 years are forecast to be covered by earnings (62.9% payout ratio).


Next Steps

Management

What is the CEO of American Electric Power Company's salary, the management and board of directors tenure and is there insider trading?

8.0yrs

Average management tenure


CEO

Nick Akins (59yo)

8.2yrs

Tenure

US$12,202,028

Compensation

Mr. Nicholas K. Akins, also known as Nick, has been the Chief Executive Officer of American Electric Power Company, Inc. since November 12, 2011 and has been its President since January 1, 2011. Mr. Akins  ...


CEO Compensation Analysis

Compensation vs Market: Nick's total compensation ($USD12.20M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Nick's compensation has been consistent with company performance over the past year.


Management Age and Tenure

8.0yrs

Average Tenure

52.5yo

Average Age

Experienced Management: AEP's management team is seasoned and experienced (8 years average tenure).


Board Age and Tenure

8.8yrs

Average Tenure

64yo

Average Age

Experienced Board: AEP's board of directors are considered experienced (8.8 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$110,62626 Aug 19
Charles Zebula
EntityIndividual
Shares1,216
Max PriceUS$90.98
SellUS$400,01630 Jul 19
Brian Tierney
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares4,458
Max PriceUS$89.73
SellUS$156,64406 Jun 19
Lisa Barton
EntityIndividual
Role
Senior Key Executive
Executive Vice President of Utilities
Shares1,752
Max PriceUS$89.41
SellUS$112,74223 May 19
Paul Chodak
EntityIndividual
Shares1,303
Max PriceUS$86.53
SellUS$388,75816 May 19
David Feinberg
EntityIndividual
Role
Chief Legal Officer
Executive VP
Shares4,535
Max PriceUS$85.72
SellUS$377,80015 May 19
Brian Tierney
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares4,392
Max PriceUS$86.02
SellUS$128,96915 May 19
Mark McCullough
EntityIndividual
Shares1,503
Max PriceUS$85.81

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Dale Heydlauff (62yo)

    Senior Vice President of Corporate Communications

    • Tenure: 3yrs
  • Joseph Buonaiuto

    Senior VP

    • Bette Rozsa

      Managing Director of Investor Relations

      • Julius Cox (48yo)

        Senior VP & Chief Human Resources Officer

        • Tenure: 0.3yrs
      • Nick Akins (59yo)

        Chairman

        • Tenure: 8.2yrs
        • Compensation: US$12.20m
      • David Feinberg (49yo)

        Executive VP

        • Tenure: 8yrs
        • Compensation: US$2.74m
      • Brian Tierney (51yo)

        Executive VP & CFO

        • Tenure: 10.3yrs
        • Compensation: US$3.67m
      • Lisa Barton (53yo)

        Executive Vice President of Utilities

        • Tenure: 8.4yrs
        • Compensation: US$2.41m
      • Lana Hillebrand (59yo)

        Executive VP & Chief Administrative Officer

        • Tenure: 7.1yrs
        • Compensation: US$2.28m
      • Gina Mazzei-Smith (52yo)

        Chief Compliance Officer


        Board Members

        • Ralph Crosby (72yo)

          Independent Director

          • Tenure: 14yrs
          • Compensation: US$298.84k
        • Lionel Nowell (64yo)

          Independent Director

          • Tenure: 15.5yrs
          • Compensation: US$303.84k
        • Tom Hoaglin (70yo)

          Lead Director

          • Tenure: 7.8yrs
          • Compensation: US$323.84k
        • Dave Anderson (70yo)

          Independent Director

          • Tenure: 8.8yrs
          • Compensation: US$293.84k
        • Dick Notebaert (72yo)

          Independent Director

          • Tenure: 8.8yrs
          • Compensation: US$278.84k
        • Linda Goodspeed (57yo)

          Independent Director

          • Tenure: 14.3yrs
          • Compensation: US$278.84k
        • Art Garcia (57yo)

          Independent Director

          • Tenure: 0.3yrs
        • Sandy Lin (61yo)

          Independent Director

          • Tenure: 7.5yrs
          • Compensation: US$280.09k
        • Sara Martinez Tucker (64yo)

          Independent Director

          • Tenure: 11yrs
          • Compensation: US$278.84k
        • Nick Akins (59yo)

          Chairman

          • Tenure: 8.2yrs
          • Compensation: US$12.20m

        Company Information

        American Electric Power Company, Inc.'s company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: American Electric Power Company, Inc.
        • Ticker: AEP
        • Exchange: NYSE
        • Founded: 1906
        • Industry: Electric Utilities
        • Sector: Utilities
        • Market Cap: US$49.874b
        • Shares outstanding: 493.95m
        • Website: https://www.aep.com

        Number of Employees


        Location

        • American Electric Power Company, Inc.
        • 1 Riverside Plaza
        • Columbus
        • Ohio
        • 43215
        • United States

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        AEPNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
        AEPDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
        0HECLSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
        AEP *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
        AEPCWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
        A1EP34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 2 COMBRBRLDec 2019

        Biography

        American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. The company generates electricity using coal and lignite, natural gas, nuclear, hydroelectric, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. The company owns, leases, or controls approximately 3,664 railcars, 468 barges, 9 towboats, and a coal handling terminal with approximately 18 million tons of annual capacity. American Electric Power Company, Inc. was founded in 1906 and is headquartered in Columbus, Ohio. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/23 23:34
        End of Day Share Price2020/01/23 00:00
        Earnings2019/09/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.