Columbus, Ohio-based American Electric Power Company, Inc. (AEP) is an electric public utility holding company that generates, transmits, and distributes electricity to retail and wholesale customers. Valued at a market cap of $55.7 billion, the company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and AEP fits the label perfectly, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the regulated electric industry. The company’s key strengths lie in its expansive and reliable infrastructure, with one of the largest transmission networks spanning over 40,000 miles. It benefits from a stable, regulated revenue model, ensuring consistent cash flow and financial resilience. Additionally, its strong customer base of over five million customers across 11 states provides a steady demand for electricity, reinforcing its position as a dominant player in the utility sector.
This utility company is currently trading 4.6% below its 52-week high of $109.52, reached recently on Mar. 4. Shares of AEP have soared 11.5% over the past three months, outpacing the Utilities Select Sector SPDR Fund’s (XLU) marginal decline during the same time frame.
In the longer term, AEP has rallied 24.7% over the past 52 weeks, outpacing XLU’s 20.8% return. Moreover, on a YTD basis, shares of AEP are up 13.2%, compared to XLU’s 2.3% rise over the same time frame.
To confirm its bullish price trend, AEP has been trading above its 200-day and 50-day moving averages since mid-January.
Shares of AEP closed up marginally after its mixed Q4 earnings release on Feb. 13. It posted Q4 adjusted earnings of $1.24 per share, which increased marginally from the year-ago quarter and met the consensus estimates. Adding to the positives, the company experienced significant load growth in its commercial class, mainly due to economic development in Indiana, Ohio, and Texas. However, on the other hand, its revenue improved 2.6% year-over-year to $4.7 billion but missed the forecasted figure by 7.5%. Looking ahead, AEP reaffirmed its fiscal 2025 operating earnings guidance. It expects to generate earnings between $5.75-$5.95 per share.
AEP’s outperformance looks even more pronounced when compared to its rival, Duke Energy Corporation (DUK), which gained 22.8% over the past 52 weeks and 9.2% on a YTD basis.
Looking at AEP’s recent outperformance, analysts remain somewhat optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 20 analysts covering it. As of writing, the company is trading above its mean price target of $103.94, while its Street-high price target of $113 represents a modest 8.2% premium to its current levels.
