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Fundamental analysis: American Electric Power Company, Inc. (AEP)

Awarener score: 6.0

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Very good) and growth (Lacking), and the company's inclination to return cash to the stockholders (Good).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 6.0

  • Business has been slightly shrinking. It's been almost average when measured against peer companies.
  • American Electric Power Company, Inc. business trend stability is very good. The higher the stability, the lower the risk. It looks well ranked against rivals.

Margins score: 8.3

  • AEP profit margins -on goods and services sold- are usually very good. They stand well ranked against rival companies.
  • Business profit on sales tends to be excellent. It's almost average when measured against competitors.
  • Profits on sales made -available to repay debt and purchase properties- are usually excellent. They remain a slight improvement compared to peers.
  • Earnings -before income taxes and interests on loans taken- tend to be very good in relation to total revenues. They're still slightly worse than similar companies.
  • Profits -before income taxes- are usually very good considering total sales, and remain almost average when measured against rivals.
  • Total net profit tends to be very good when confronted to sales. Company stands encouraging in relation to comparable firms.

Growth score: 3.3

  • American Electric Power Company, Inc. profit -on goods and services sold- has been growing at a very low pace. It's been excellent in relation to competitors.
  • In recent years, earnings growth -on operations- have been almost stagnant, which has been slightly worse than comparable firms.
  • Profits -available to repay debt and purchase properties- have been growing at a very low pace, which compares almost average when measured against peer enterprises.
  • Growth on earnings -before income taxes and interests on loans taken- have been almost stagnant. It turns to be close to average when compared to similar stocks.
  • In past years, growth on profits -before income taxes- was almost stagnant. It was slightly worse than rivals.
  • In the previous years, growth on total net profit has been almost null, and almost average when measured against peer companies.
  • Earnings per share have been almost stagnant in past years. It's been close to average when compared to industry peers.

Miscellaneous score: 9.0

  • AEP managed to pay no income taxes on profits made in the past years, sometimes even got a credit. It's been slightly better than peers.
  • The company does not report R&D expenses. It's meaningless to measure in relation to competitors.
  • We have insufficient data to estimate how effective is research and development effort. It stands unknown against rival companies.

Profitability score: 7.5

  • American Electric Power Company, Inc. usually gets good returns on the resources it controls. It proves below average when measured against peer firms.
  • The company normally gets sufficient proceeds -on the resources directly invested in the business-. They remain a slight improvement compared to similar companies.
  • Profitability -in relation to owned resources- is usually paramount. It ranks top tier when measured against competitors.
  • In the past, got good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's below average when measured against comparable enterprises.

Usage of Funds score: 5.4

  • AEP usually uses a modest portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments isn't too high. It stands below average when measured against rival firms.
  • The company is usually largely investing in new property, plant, and equipment, to expand its operating capabilities, which is encouraging in relation to industry peers.
  • In the past twelve months it paid good dividends, considering the current stock price. It came slightly worse than competitors.
  • Dividend payments have been more or less stable in recent years. The company has behaved close to average when compared to similar firms.
  • The company generates very few genuine funds. Dividend payments are usually on borrowed money, which isn't sustainable in the long run. Unless business prospects improve greatly, future payments could be at risk. Sustainability looks bottom tier against comparable companies.
  • The company barely enlarges the pool of investors, resulting in slightly more mouths feeding on the pie of profits. It remains in good shape compared to peer enterprises.
  • Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands in a very weak position compared to rivals.
  • We do not have sufficient data to comment on buybacks and their sustainability. It still looks dubious against competitors.

Balance Sheet score: 5.1

  • American Electric Power Company, Inc. intangible assets (like brands and goodwill) represent a portion of resources controlled, according to accounting books. There could be difficulties in liquidating them if the company ever gets in financial distress. It happens to be last-in-rank when measured against peer companies.
  • The company has somewhat lower short-term resources than short-term obligations. Unless it's part of the business model, there might some liquidity concerns. It turns to be in a very weak position compared to similar firms.
  • A significant part of resources controlled were provided for with financial debt. Creditors have almost as many claims on the company as shareholders. It remains somewhat worse than rival firms.
  • Controlled resources take time to be turned into cash and equivalents, which is somewhat risky. It looks more than average in relation to rivals.
  • For every dollar of short-term obligations, the company has few cents of cash and short-term receivables. It's a disappointment compared to peer firms.
  • For every dollar of short-term obligations, the company has extremely few cents of cash and equivalents, which is slightly worse than similar enterprises.
  • Usually, sales are on less than a month credit. It still ranks great when measured against peers.
  • Normally has approximately somewhat less than two months of sales worth in inventory. It comes up as in a weak position compared to competitors.
  • On average, it takes less than three months from the purchase to charging customers. It happens to be better than most peers.
  • On average pays suppliers approximately four months or higher after the purchase. It ranks great when measured against industry peers.
  • The company charges its customers before it must pay its suppliers, so the more it sales, the more free funds it gets. It's excellent in relation to similar companies.
  • Net interest expenses consume a significant portion of usual business earnings, but are mostly bearable. It stands somewhat worse than rival firms.
  • Business earnings have usually been low when measured against loans taken. Even cutting back reinvesting in the business, it could take more than seven years to repay the obligations with current profitability. It ranks almost average when measured against comparable enterprises.
  • Last twelve months revenues were non-significant in relation to fixed assets. The company must improve income to take advantage of used resources. It looks in a weak position compared to similar firms.
  • Resource exploitation is low when yearly sales are considered, business volume must be significantly increased. This metric is normally tied to the industry where the firm belongs. It's still somewhat worse than peer companies.

Valuation score: 4.8

  • American Electric Power Company, Inc. looks very expensive in relation to profits and financial position. It happens to be similar to competitors.
  • Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains in a very weak position compared to peers.
  • In the past twelve months, the company generated some slightly better free funds in relation to the stock price, which stands better than most similar companies.
  • In the past years the company barely generated enough genuine funds to cover up for its business needs. Business prospects should improve to be in a better position to reward investors. It's still almost average when measured against industry firms.
  • In the past twelve months, the company has barely rewarded investors, considering both dividends and share on the pie of earnings. It came up lacking compared to peer ventures.
  • The company is largely indebted. It should focus on loan repayment before rewarding stockholders. It looks somewhat worse than similar enterprises.
  • Considering the past twelve months, traditional Price-to-Earnings relation is somewhat high. Improvement expectations are already in the stock price, which presents some risks. It ranks encouraging in relation to peer companies.
  • Comparing the current stock price with the past twelve-months revenues gives a three or four to one relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks lacking compared to rival firms.
  • The relation between the stock price and accounting book value is extremely high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains worse than most peer firms.
  • In the past twelve months, the operating business earned some money when compared to the current stock price and financial position. It happens to be similar to industry peers.
  • In an alternate metric of bang for the buck, the company has usually shown a good earnings power ability when measured against the current stock price and financial position. It's still close to average when compared to peer companies.

Total score: 6.2


AEP logos

Company at a glance: American Electric Power Company, Inc. (AEP)

Sector, industry: Utilities, Utilities—Regulated Electric

Market Cap: 49.58 billions

Revenues TTM: 18.82 billions

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.

Awarener score: 6.0

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Very good) and growth (Lacking), and the company's inclination to return cash to the stockholders (Good).