American Electric Power Company, Inc. (NYSE:AEP): Will The Growth Last?

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After American Electric Power Company, Inc.’s (NYSE:AEP) earnings announcement in March 2019, the consensus outlook from analysts appear somewhat bearish, with profits predicted to rise by 1.2% next year compared with the higher past 5-year average growth rate of 1.8%. Currently with trailing-twelve-month earnings of US$1.9b, we can expect this to reach US$1.9b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for American Electric Power Company

What can we expect from American Electric Power Company in the longer term?

The 12 analysts covering AEP view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:AEP Past and Future Earnings, June 13th 2019
NYSE:AEP Past and Future Earnings, June 13th 2019

From the current net income level of US$1.9b and the final forecast of US$2.3b by 2022, the annual rate of growth for AEP’s earnings is 7.1%. EPS reaches $4.74 in the final year of forecast compared to the current $3.9 EPS today. With a current profit margin of 12%, this movement will result in a margin of 13% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For American Electric Power Company, I’ve put together three key factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for American Electric Power Company’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of American Electric Power Company? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.