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How Does AEP’s Valuation Compare to Its Peers?

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Valuation

American Electric Power (AEP) stock is trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation of 10.8x, while its five-year historical average valuation is ~10x. Broader utilities (XLU) are trading at a valuation multiple of 10.5x. American Electric Power stock seems to be trading at a fair premium compared to its historical valuation and the industry average.

Top utility stocks NextEra Energy (NEE) and Duke Energy (DUK) are trading at a valuation multiple of 13x and 11.5x.

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American Electric Power appears to be trading at a premium considering its PE (price-to-earnings) multiple as well. American Electric Power is trading at a multiple beyond 18x. Utilities’ current PE multiple is ~16x. NextEra Energy is trading at a PE multiple of 18x, while Duke Energy is trading at a PE multiple of 20x.

To learn more about top utilities’ recent performance and valuation, read An Investor’s Guide: A Look at the 10 Largest S&P 500 Utilities.

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