What Should Investors Know About American Electric Power Company Inc’s (AEP) Future?
Based on the latest analyst predictions, American Electric Power Company Inc (NYSE:AEP) is estimated to significantly grow its earnings by 259.84% in the upcoming three years. With the recent EPS being $1.169, expected growth will push the upcoming EPS to $4.206. I am going to look at the latest data on AEP to assess whether this expected growth is reasonable. View our latest analysis for American Electric Power Company
How is American Electric Power Company going to perform in the future?
One reason why investors are attracted to AEP is the high growth potential in the near future. Expectations from 11 analysts are high, with earnings per share forecasted to rise significantly from todays level of $1.169 to more than double over the next couple of years. In the same period revenue is expected to grow from $15,952M to $17,033M and profit is predicted to shoot up from $575M to $2,068M in the next couple of years, roughly growing 3.6x. Furthermore, margins are on track to be a respectable 12.16% in the future.
Is the growth built on solid basis?
The past can be a helpful indicator for future performance for a stock. We can determine whether this level of expected growth is highly excessive or whether the company has consistently exhibited strength. However, AEP’s earnings growth in the past couple of years has been negative at -4.53%. Although its past performance illustrates a different picture to earnings growth moving forward, it could also mean AEP is growing off a lower base, meaning a higher growth rate is easier to achieve. This sign change in growth could indicate a turnaround initiative.
Next Steps:
For AEP, there are three fundamental aspects you should further examine:
1. 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.
2. 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.
3. 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.
