American Electric Power Company Inc (NYSE:AEP): What Are The Future Prospects?
American Electric Power Company Inc’s (NYSE:AEP) released its most recent earnings update in December 2017, which showed that the business experienced a significant tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key numbers on how market analysts predict American Electric Power Company’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. View our latest analysis for American Electric Power Company
Market analysts’ prospects for this coming year seems rather subdued, with earnings increasing by a single digit 0.58%. The following year doesn’t look much more exciting, though earnings does reach US$2.14B in 2021.
While it is helpful to understand the growth rate year by year relative to today’s value, it may be more beneficial to analyze the rate at which the business is rising or falling on average every year. The advantage of this approach is that we can get a bigger picture of the direction of American Electric Power Company’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.17%. This means that, we can anticipate American Electric Power Company will grow its earnings by 4.17% every year for the next couple of years.
Next Steps:
For American Electric Power Company, I’ve compiled three pertinent factors you should look at:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Future Earnings: How does AEP’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of AEP? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
