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1. Company Snapshot

1.a. Company Description

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.

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1.b. Last Insights on AEP

American Electric Power's recent performance is driven by its robust capital plan, which includes a $72 billion investment over five years in transmission, distribution, and renewables. This strategic plan aims to achieve 7-9% annual earnings growth through 2030, fueled by rising demand from data centers and commercial customers. The company's focus on infrastructure expansion and dividend growth, with a 3.11% dividend yield, has garnered attention. AEP's updated capital plan supports a 10% compounded annual growth rate in rate base to $128 billion by 2030, positioning the company for long-term growth.

1.c. Company Highlights

2. AEP's Strong Q3 Earnings and Growth Outlook

American Electric Power's (AEP) third-quarter 2025 operating earnings were $1.80 per share, slightly below estimates of $1.81 per share. The company's operating earnings were $963 million, and it reaffirmed its 2025 full-year operating earnings range of $5.75 to $5.95 per share. AEP introduced a 2026 operating earnings guidance range of $6.15 to $6.45 per share, representing an approximate 8% increase from the 2025 guidance range midpoint.

Publication Date: Nov -03

📋 Highlights
  • 2026 Earnings Guidance:: AEP raised 2026 operating earnings guidance to $6.15–$6.45/share, a 8% increase from 2025’s midpoint of $5.85/share.
  • Long-Term Growth Target:: Adjusted long-term operating earnings growth to 7–9% annually (2026–2030), with 9% CAGR expected in final 3 years.
  • $72B Capital Plan:: 30% higher than prior plan, allocating 67% to transmission/generation and 33% to distribution, driving 10% rate base CAGR.
  • Transmission Expansion:: 765 kV network to support 65 GW peak demand by 2030 (76% increase), with $7B invested in renewables and $50B transmission rate base target.
  • Load Growth Drivers:: 28 GW of contracted incremental load by 2030, 80% from data centers/commercial, 20% from industrial, backed by 190 GW potential pipeline.

Growth Drivers and Capital Plan

AEP's growth is driven by a $72 billion capital plan, fueled by massive system demand, particularly from data centers, industrial development, and economic growth across its 11-state service territory. The company projects a system peak demand of 65 gigawatts by 2030, a 76% increase in the next 5 years. As Trevor Mihalik noted, AEP has "strong load growth fundamentals, with 28 gigawatts of incremental and contracted load backed by electric service agreements or letters of agreement, supporting the company's capital strategy and growth outlook."

Regulatory Outcomes and Customer Affordability

AEP is focused on operational excellence, constructive regulatory outcomes, and customer affordability, with a forecasted residential customer rate increase of approximately 3.5% annually over the 5-year period. The company's transmission rate base is expected to exceed $50 billion by 2030, and its financing strategy is grounded in strong cash flow from operations.

Valuation and Growth Prospects

AEP's earnings growth is expected to be driven by strong load growth, with a 7-9% CAGR from 2026-2030. The company's P/E Ratio is 0.06, and its ROE is 3622.44%, indicating a strong return on equity. Analysts estimate next year's revenue growth at 7.1%. With a Dividend Yield of 3.09%, AEP offers an attractive yield to investors. The company's robust pipeline of opportunities, with 190 gigawatts of potential load growth, supports its growth prospects.

Capital Structure and Financing

AEP's 5-year financing plan supports robust liquidity, with only about 25% of its outstanding debt maturing through 2030, and a modest amount of growth equity totaling $5.9 billion. The company targets an FFO to debt ratio of 14% to 15% for both S&P and Moody's, indicating a strong credit profile.

3. NewsRoom

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FE vs. AEP: Which Stock Is the Better Value Option?

Nov -25

Source: zacks.com

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Atlas Engineered Products Ltd. (AEP:CA) Q3 2025 Earnings Call Transcript

Nov -24

Source: seekingalpha.com

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I&M Receives IURC Approval for Oregon Clean Energy Center Purchase

Nov -19

Source: prnewswire.com

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American Electric Positioned for Growth via Investments and Renewables

Nov -19

Source: zacks.com

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5 Top Utility Stocks Powering The Global Grid

Nov -14

Source: seekingalpha.com

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Renewable Energy & Battery Stocks to Watch as Renewables Beat Coal

Nov -13

Source: zacks.com

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'Fast Money' traders share their stock 'shopping lists'

Nov -07

Source: youtube.com

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AEP and Quanta Services Announce Strategic Partnership to Advance Transmission and Power Infrastructure

Nov -05

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.30%)

6. Segments

Vertically Integrated Utilities

Expected Growth: 2.5%

The growth is expected to be moderate due to increasing demand for electricity and allowed rate increases. However, the growth will be limited by regulatory constraints and competition from other energy sources.

Generation & Marketing

Expected Growth: 4.2%

Growth is driven by an increase in demand for electricity and higher market prices. However, the segment is exposed to fuel price volatility and competition from other generators, which could impact profitability.

Transmission and Distribution Utilities

Expected Growth: 3.1%

Growth is driven by increasing demand for electricity and investments in grid infrastructure. The segment's growth will be supported by rate increases and efficiency improvements, but will be limited by regulatory constraints.

AEP Transmission Holdco

Expected Growth: 5.5%

Growth is driven by increasing demand for transmission services and investments in new transmission infrastructure. The segment's growth will be supported by a favorable regulatory environment and a strong demand for electricity.

Corporate and Other

Expected Growth: 1.8%

Growth is limited due to the segment's small size and support functions. However, the segment's growth will be driven by investments in renewable energy and other new businesses.

Reconciling Adjustments

Expected Growth: None%

None

7. Detailed Products

Electricity Generation

American Electric Power Company, Inc. generates electricity through various sources including fossil fuels, nuclear, and renewable energy sources.

Transmission and Distribution

The company owns and operates a vast network of transmission and distribution lines, substations, and other infrastructure to deliver electricity to customers.

Energy Efficiency Programs

AEP offers various energy efficiency programs to help customers reduce their energy consumption and lower their energy bills.

Renewable Energy Solutions

AEP provides renewable energy solutions, including wind and solar power, to customers seeking clean and sustainable energy options.

Grid Modernization

AEP invests in grid modernization initiatives to improve the reliability, efficiency, and resilience of its grid infrastructure.

8. American Electric Power Company, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for American Electric Power Company, Inc. is medium due to the availability of alternative energy sources such as solar and wind power. However, the high cost of switching to these alternatives and the lack of infrastructure in some areas reduce the threat.

Bargaining Power Of Customers

The bargaining power of customers for American Electric Power Company, Inc. is low due to the lack of alternative energy providers in many areas and the high cost of switching to alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for American Electric Power Company, Inc. is medium due to the presence of multiple suppliers of fuel and equipment. However, the high demand for these inputs and the lack of substitutes reduce the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants for American Electric Power Company, Inc. is low due to the high barriers to entry in the industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry for American Electric Power Company, Inc. is high due to the presence of multiple competitors in the industry and the need to compete on price and service to attract and retain customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 63.33%
Debt Cost 3.95%
Equity Weight 36.67%
Equity Cost 6.45%
WACC 4.86%
Leverage 172.73%

11. Quality Control: American Electric Power Company, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
American Electric Power

A-Score: 6.9/10

Value: 5.7

Growth: 4.6

Quality: 6.8

Yield: 7.0

Momentum: 7.5

Volatility: 10.0

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Edison

A-Score: 6.4/10

Value: 8.3

Growth: 5.3

Quality: 7.5

Yield: 9.0

Momentum: 1.0

Volatility: 7.3

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Duke Energy

A-Score: 6.4/10

Value: 5.5

Growth: 4.7

Quality: 4.6

Yield: 7.0

Momentum: 6.5

Volatility: 10.0

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Southern

A-Score: 6.0/10

Value: 2.5

Growth: 4.8

Quality: 5.5

Yield: 7.0

Momentum: 6.5

Volatility: 10.0

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ConEd

A-Score: 5.9/10

Value: 6.1

Growth: 4.2

Quality: 4.9

Yield: 7.0

Momentum: 3.0

Volatility: 10.0

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PSEG

A-Score: 5.5/10

Value: 5.0

Growth: 3.8

Quality: 4.6

Yield: 6.0

Momentum: 3.5

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

117.54$

Current Price

117.54$

Potential

-0.00%

Expected Cash-Flows