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Based in Columbus, Ohio, American Electric Power Company, Inc. (AEP), founded in 1906, stands as a leading investor-owned electric utility in the U.S. Serving over five million customers across 11 states, American Electric boasts nearly 38,000 megawatts of generating capacity. With a $46.9 billion market cap, it thrives in economically robust regions like the Midwest and Ohio Valley, benefiting from major manufacturing hubs and millennial migration.
Shares of American Electric underperformed the broader market over the past 52 weeks. AEP has gained 4.5% over this time frame, while the broader S&P 500 Index ($SPX) rallied 28.9%. Even with a 9.5% rise in 2024, shares of American Electric trail the SPX's 11.2% gains on a YTD basis.
Narrowing the focus, AEP’s single-digit gain over the past 52 weeks falls short of the S&P 500 Utilities Sector SPDR’s (XLU) 9.2% returns over the same period.
Over the past year, American Electric Power faced setbacks due to its coal dependency and regulatory issues, dimming investor enthusiasm. However, AEP stock climbed following robust Q1 earnings reported on April 30, fueled by rate changes, favorable weather, and higher data center demand. The company’s multibillion-dollar renewable energy investments, strong balance sheet, high FFO-to-debt ratio, and ample liquidity have all piqued investor interest.
For the current fiscal year, ending in December, analysts expect American Electric’s EPS to grow by 6.3% to $5.58. The company's earnings surprise history is mixed. It beat consensus estimates in one of the last four quarters while missing on three other occasions.
Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on six “Strong Buys,” one “Moderate Buy,” nine “Holds,” and two “Strong Sell” ratings.
This configuration has been consistent over the past months. However, it appears slightly less bullish than three months before, with seven “Strong Buy” ratings and no “Strong Sell” ratings.
On May 14, BMO Capital maintained an “Outperform” rating on American Electric stock and raised the price target from $95 to $99. The upgrade follows American Electric's sale of its distribution resources business for $315 million while retaining its retail business and reaffirming 2024 earnings guidance. BMO sees the utility company's strategic moves and strong market performance as key drivers for the higher target.
The stock currently trades slightly below the mean price target of $89.12. However, the Street-high price target of $100, set by RBC Capital earlier this month, represents an upside potential of 12.4% from AEP's current levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
