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American Electric Power (AEP) Gains But Lags Market: What You Should Know

·3 min read

American Electric Power (AEP) closed at $95.22 in the latest trading session, marking a +1.01% move from the prior day. The stock lagged the S&P 500's daily gain of 1.92%. Meanwhile, the Dow gained 2.15%, and the Nasdaq, a tech-heavy index, added 0.12%.

Heading into today, shares of the utility had gained 5.7% over the past month, outpacing the Utilities sector's loss of 1.24% and the S&P 500's gain of 1.54% in that time.

Wall Street will be looking for positivity from American Electric Power as it approaches its next earnings report date. This is expected to be July 27, 2022. On that day, American Electric Power is projected to report earnings of $1.13 per share, which would represent a year-over-year decline of 4.24%. Meanwhile, our latest consensus estimate is calling for revenue of $4.19 billion, up 9.6% from the prior-year quarter.

AEP's full-year Zacks Consensus Estimates are calling for earnings of $4.99 per share and revenue of $18.22 billion. These results would represent year-over-year changes of +5.27% and +8.41%, respectively.

Investors should also note any recent changes to analyst estimates for American Electric Power. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.51% lower. American Electric Power is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, American Electric Power currently has a Forward P/E ratio of 18.9. Its industry sports an average Forward P/E of 18.71, so we one might conclude that American Electric Power is trading at a premium comparatively.

It is also worth noting that AEP currently has a PEG ratio of 3.05. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Utility - Electric Power industry currently had an average PEG ratio of 3.18 as of yesterday's close.

The Utility - Electric Power industry is part of the Utilities sector. This group has a Zacks Industry Rank of 89, putting it in the top 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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