Facts You Need to Understand American Electric Power Company Stock

American Electric Power Company logged a -0.2% change during today's afternoon session, and is now trading at a price of $80.38 per share.

American Electric Power Company returned losses of -14.0% last year, with its stock price reaching a high of $100.32 and a low of $69.38. Over the same period, the stock underperformed the S&P 500 index by -29.0%. As of April 2023, the company's 50-day average price was $76.24. 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. Based in Columbus, OH, the large-cap Utilities company has 16,974 full time employees. American Electric Power Company has returned a 4.1% dividend yield over the last 12 months, but this may not be sustainable seen that the company has a choppy cash flow record.

An Unconvincing Cash Flow History With a Downwards Trend:

2018 2019 2020 2021 2022 2023
Revenue (MM) $16,196 $15,561 $14,918 $16,792 $19,640 $19,286
Revenue Growth n/a -3.92% -4.13% 12.56% 16.96% -1.8%
Gross Margins 17% 17% 20% 20% 18% 18%
Operating Margins 17% 17% 20% 20% 18% 18%
Net Margins 12% 12% 15% 15% 12% 12%
Net Income (MM) $1,931 $1,921 $2,200 $2,488 $2,307 $2,258
Net Interest Expense (MM) $984 $1,072 $1,166 $1,199 $1,396 $1,740
Depreciation & Amort. (MM) $2,287 $2,514 $2,683 $2,826 $3,203 $3,095
Earnings Per Share $3.9 $3.88 $4.42 $4.96 $4.49 $4.34
EPS Growth n/a -0.51% 13.92% 12.22% -9.48% -3.34%
Diluted Shares (MM) 494 495 497 502 513 529
Free Cash Flow (MM) -$1,088 -$1,781 -$2,413 -$1,820 -$1,384 -$3,460
Capital Expenditures (MM) $6,311 $6,051 $6,246 $5,660 $6,672 $7,690
Current Ratio 0.48 0.4 0.44 0.46 0.51 0.6
Long Term Debt (MM) $33,117 $25,127 $28,986 $32,204 $34,315 $36,716
Net Debt / EBITDA 7.35 5.74 5.85 5.9 6.04 6.35

American Electric Power Company has slimmer gross margins than its peers, an unconvincing cash flow history, and a highly leveraged balance sheet. On the other hand, the company benefits from weak revenue growth and increasing reinvestment in the business and positive EPS growth. Furthermore, American Electric Power Company has average net margins with a stable trend.

American Electric Power Company's Valuation Is in Line With Its Sector Averages:

American Electric Power Company has a trailing twelve month P/E ratio of 17.5, compared to an average of 17.53 for the Utilities sector. Based on its EPS guidance of $5.61, the company has a forward P/E ratio of 13.6. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 1.8%. On this basis, the company's PEG ratio is 9.73, which suggests that it is overpriced. In contrast, the market is likely undervaluing American Electric Power Company in terms of its equity because its P/B ratio is 1.67 while the sector average is 1.71. The company's shares are currently trading 17.3% above their Graham number.

Analysts Give American Electric Power Company an Average Rating of Buy:

The 15 analysts following American Electric Power Company have set target prices ranging from $74.5 to $99.0 per share, for an average of $86.83 with a buy rating. As of April 2023, the company is trading -12.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.

American Electric Power Company has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 76.6% of the company's shares, and the insider ownership rate stands at 0.03%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $3,922,517,581.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.