Valued at a market cap of $53.4 billion, American Electric Power Company, Inc. (AEP) is an electric public utility holding company that engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers. The Columbus, Ohio-based company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources.
This utility company’s shares have outpaced the broader market over the past 52 weeks. AEP has rallied 29.8% over this time frame, while the broader S&P 500 Index ($SPX) has gained 20.6%. Moreover, the stock is up 8.8% on a YTD basis, compared to SPX’s 2.5% rise during the same time frame.
Zooming in further, AEP has also outshined the Utilities Select Sector SPDR Fund’s (XLU) 29.2% return over the past 52 weeks and a 3.2% gain on a YTD basis.
On Nov. 6, shares of AEP plunged 4.1% despite delivering better-than-expected Q3 adjusted EPS of $1.85 and revenue of $5.4 billion, reflecting 4.5% and 2.4% year-over-year growth, respectively. However, the company’s narrowed full-year 2024 EPS guidance to $5.58 - $5.68, raised concerns about limited growth potential might have dampened investor confidence. Moreover, a 1% annual drop in electricity sales volume from the Vertically Integrated Utilities segment and a 6.1% year-over-year rise in interest expenses might have further added to the downtick.
For the fiscal year, which ended in December, analysts expect AEP’s EPS to grow 6.3% year over year to $5.58. The company’s earnings surprise history is mixed. It surpassed the Wall Street estimates in two of the last four quarters while missing on two other occasions.
Among the 20 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on six “Strong Buy,” one “Moderate Buy,” 12 “Hold,” and one “Strong Sell” rating.
This configuration is more bullish than one month ago, with four analysts suggesting a “Strong Buy” rating.
On Jan. 21, Evercore ISI analyst Durgesh Chopra maintained an “In Line” rating on AEP and raised its price target to $102, which indicates a 2.6% potential upside from the current levels.
The mean price target of $99.42 represents a slight 2.4% upside from American Electric Power’s current price levels, while the Street-high price target of $113 suggests an upside potential of 13.6%.
