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Here's Why You Should Add American Electric Power (AEP) Now

Zacks Equity Research

American Electric Power Company, Inc.’s AEP strong liquidity position, ongoing investments in transmission projects and expanding renewable portfolio bode well for its earnings in the future.

The Zacks Consensus Estimate for the company's 2019 and 2020 earnings indicates rise of 4.6% and 6.4% on a year-over-year basis to $4.13 and $4.40, respectively.

Let’s focus on the factors that make the stock an appropriate pick at the moment.

Zacks Rank and Surprise History

The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its average four-quarter positive earnings surprise is 2.96%.

Price Movement

 



In the past 12 months, American Electric Power’s shares have rallied 27.3% compared with the industry’s rise of 13%.

Long-Term Growth and Dividend Yield

The company’s long-term (three to five years) earnings growth estimate is pegged at 5.66%.

Currently, it has a dividend yield of 2.86% compared with the Zacks S&P 500 composite’s 1.95% and the industry's 2.84%.

Investments

The company has a geographically-diversified operation, which enables it to generate high returns. In this context, American Electric’s strategy will allow it to invest approximately $16.6 billion in its transmission and distribution business over the next four years. Of the total, 50% of its investment forecast is aimed to enhance customer reliability. The company’s strategy also includes incremental investments in renewable generation projects across the United States. Its latest plan includes capital expenditure expectations of $2.2 billion in contracted renewables over the 2019-2023 period, of which $1.5 billion has already been spent.

Other Key Picks

Some other top-ranked stocks in the Utility sector are Pampa Energia S.A. PAM, NRG Energy, Inc NRG and FirstEnergy Corporation FE. Pampa Energia and NRG Energy currently sport a Zacks Rank #1, while FirstEnergy carries a Zack Rank of 2.

Pampa Energia, NRG Energy and FirstEnergy delivered average positive earnings surprises of 143.10%, 11.64% and 4.24%, respectively, in the last four quarters.

The long-term earnings growth rates for Pampa Energia, NRG Energy and FirstEnergy are pegged at 20.59%, 36.26% and 6%, respectively.

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American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
 
NRG Energy, Inc. (NRG) : Free Stock Analysis Report
 
Pampa Energia S.A. (PAM) : Free Stock Analysis Report
 
FirstEnergy Corporation (FE) : Free Stock Analysis Report
 
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