American Electric Power Company, Inc. (AEP) Buy or Sell Stock Guide

February 12, 2020

Are you looking for the analysis of American Electric Power Company, Inc. (AEP) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 6 reasons to buy and 9 reasons to sell AEP stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about AEP stock:

  • Is AEP a buy or a sell?
  • Should I sell or hold AEP stock today?
  • Is AEP a good buy / investment?
  • What are AEP analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy AEP stock:

1. Investments in transmission and environmental improvements during the next several years should support strong earnings growth.

2. AEP earns regulated returns in many different state jurisdictions, protecting its earnings from the impact of one adverse regulatory ruling.

3. Management continues to move the company toward being a fully regulated utility.

4. AEP forward dividend yield is 2.69%, higher than the industry (0.93%) and sector (0.81%) forward dividend yields. See AEP forward dividend chart.

5. AEP PEG ratio (P/E adjusted for growth) is 4.08, and it’s low compared to its industry peers’ PEG ratios. See AEP PEG chart.

6. AEP average analyst rating is Buy. See AEP analyst rating chart.

Now that you understand the bull case, let’s look at the reasons to sell AEP stock (i.e., the bear case):

1. AEP's Ohio generation assets are predominantly coal, putting the firm at a cost disadvantage in a period of low natural gas prices.

2. Greenhouse gases are a long-term problem for the company's coal plants because there is currently no economically feasible technology to eliminate carbon dioxide emissions.

3. AEP has significant operations in Ohio, which has one of the most unstable regulatory environments in the country.

4. AEP stock price ($102.22) is close to the 52-week high ($104.22). Perhaps now is a good time to sell? See AEP price chart.

5. AEP quarterly revenue growth was -0.40%, lower than the industry and sector average revenue growth (2.29% and 2.96%, respectively). See AEP revenue growth chart.

6. AEP profitability is declining. The YoY profit margin change was -0.52 percentage points. See AEP profitability chart.

7. AEP forward P/E ratio is 23.69, and it’s high compared to its industry peers’ P/E ratios. See AEP forward P/E ratio chart.

8. AEP average analyst price target ($97.67) is below its current price ($102.22). See AEP price target chart.

9. AEP short interest (days to cover the shorts) ratio is 4.01. The stock garners more short interest than the average industry, sector or S&P 500 stock. See AEP short interest ratio chart.

Now let's look at the key statistics for AEP:

Metrics AEP
Price $101.72
Average Price Target / Upside $97.67 / -3.98%
Average Analyst Rating Buy
Forward Dividend Yield 2.72%
Industry Utilities - Regulated Electric
Sector Utilities
Number of Employees 17,582
Market Cap $51.79B
Forward P/E Ratio 23.58
Price/Book Ratio 3.29
Revenue (TTM) $15.75B
YoY Quarterly Revenue Growth -0.40%
Profit Margin 13.53%

What are your thoughts on AEP?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

Comments0
Follow Us