It's been a great morning session for American Electric Power Company investors, who saw their shares rise 1.1% to a price of $78.11 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
American Electric Power Company's Valuation Is in Line With Its Sector Averages:
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 belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 17.53 and an average price to book (P/B) ratio of 1.71. In contrast, American Electric Power Company has a trailing 12 month P/E ratio of 17.9 and a P/B ratio of 1.62.
American Electric Power Company's PEG ratio is 4.01, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Strong Revenue Growth With no capital expenditures:
| 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% |
| Operating Margins | 17% | 17% | 20% | 20% | 18% | 18% |
| Net Margins | 12% | 12% | 15% | 15% | 12% | 12% |
| Net Income (MM) | $1,931 | $1,920 | $2,197 | $2,488 | $2,306 | $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 | 521 |
| Free Cash Flow (MM) | $5,209 | $4,267 | $3,833 | -$1,820 | -$1,384 | -$3,460 |
| Current Ratio | 0.48 | 0.4 | 0.44 | 0.46 | 0.51 | 0.6 |
| Total Debt (MM) | $23,347 | $26,744 | $31,108 | $34,558 | $36,801 | $39,489 |
| Net Debt / EBITDA | 4.65 | 5.19 | 5.42 | 5.48 | 5.43 | 5.94 |
