American Electric Power
American Electric Power (AEP) is the sixth largest utility with a $36 billion market capitalization. AEP operates in 11 states and serves more than 5.4 million customers. Its earnings stability is expected to increase in the next few years given its focus on increasing regulated operations. Its capital expenditure plan for the next few years is expected to increase its rate base significantly, which might support earnings growth in the future.
AEP has been paying dividends for more than 100 years, one of the longest dividend paying histories among S&P 500 utilities (XLU). You can learn about AEP’s dividends in American Electric Power’s Dividend Growth Compared to Its Peers.
AEP is currently trading at an EV-to-EBITDA valuation of 11.5x, while its five-year historical valuation comes to around 10x. Thus, AEP stock seems to be trading at a fair premium compared to its historical valuation.
AEP appears to be trading at a premium given its price-to-earnings (or PE) multiple as well. It’s currently trading at 20x.
AEP has a mean price target of $75.5 against its current market price of $76.7, which indicates a flattish to negative movement of AEP going forward.
Among 17 analysts currently covering AEP, ten rate it as a “hold.” Four analysts recommend the stock as a “strong buy,” and three analysts recommend it as a “buy.”
On December 13, 2017, Morgan Stanley raised AEP’s outlook from “equal weight” to “overweight.” It also raised AEP’s price target from $80.0 to $83.0.