American Electric Power Company, Inc. Fundamental Analysis (NASDAQ: AEP)
American Electric Power Company, Inc. Fundamental Analysis (NASDAQ: AEP)
American Electric Power Company, Inc. (NASDAQ: AEP) shows moderate financial fundamentals with a PE ratio of 21.63, profit margin of 13.95%, and ROE of 10.01%. The company generates $22.5B in annual revenue with moderate year-over-year growth of 9.37%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 50.7/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze AEP's fundamental strength across five key dimensions:
Efficiency Score
WeakAEP struggles to generate sufficient returns from assets.
Valuation Score
ExcellentAEP trades at attractive valuation levels.
Growth Score
ExcellentAEP delivers strong and consistent growth momentum.
Financial Health Score
WeakAEP carries high financial risk with limited liquidity.
Profitability Score
WeakAEP struggles to sustain strong margins.
Key Financial Metrics
Is AEP Expensive or Cheap?
P/E Ratio
AEP trades at 21.63 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, AEP's PEG of -1.45 indicates potential undervaluation.
Price to Book
The market values American Electric Power Company, Inc. at 2.13 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 1.79 times EBITDA. This is generally considered low.
How Well Does AEP Make Money?
Net Profit Margin
For every $100 in sales, American Electric Power Company, Inc. keeps $13.95 as profit after all expenses.
Operating Margin
Core operations generate 28.36 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.01 in profit for every $100 of shareholder equity.
ROA
American Electric Power Company, Inc. generates $2.58 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
American Electric Power Company, Inc. generates strong operating cash flow of $7.62B, reflecting robust business health.
Free Cash Flow
American Electric Power Company, Inc. generates strong free cash flow of $8.96B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $16.46 in free cash annually.
FCF Yield
AEP converts 13.10% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
21.63
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.45
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.13
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.04
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.66
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.50
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.10
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.06
vs 25 benchmark
How AEP Stacks Against Its Sector Peers
| Metric | AEP Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 21.63 | 20.43 | Neutral |
| ROE | 10.01% | 1037.00% | Weak |
| Net Margin | 13.95% | -667.00% (disorted) | Strong |
| Debt/Equity | 1.66 | 1.68 | Neutral |
| Current Ratio | 0.50 | 1.72 | Weak Liquidity |
| ROA | 2.58% | 4578092.00% | Weak |
AEP outperforms its industry in 1 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews American Electric Power Company, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
39.59%
Industry Style: Defensive, Dividend, Income
High GrowthEPS CAGR
55.45%
Industry Style: Defensive, Dividend, Income
High GrowthFCF CAGR
73.07%
Industry Style: Defensive, Dividend, Income
High Growth