As you might know, American Electric Power Company, Inc. (NASDAQ:AEP) recently reported its quarterly numbers. Revenues were US$5.0b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$1.91, an impressive 53% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
After the latest results, the 15 analysts covering American Electric Power Company are now predicting revenues of US$20.5b in 2024. If met, this would reflect a reasonable 6.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 5.1% to US$5.61. Before this earnings report, the analysts had been forecasting revenues of US$20.5b and earnings per share (EPS) of US$5.62 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$88.22. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic American Electric Power Company analyst has a price target of US$99.00 per share, while the most pessimistic values it at US$73.00. This is a very narrow spread of estimates, implying either that American Electric Power Company is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting American Electric Power Company's growth to accelerate, with the forecast 8.6% annualised growth to the end of 2024 ranking favourably alongside historical growth of 5.9% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that American Electric Power Company is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on American Electric Power Company. Long-term earnings power is much more important than next year's profits. We have forecasts for American Electric Power Company going out to 2026, and you can see them free on our platform here.
Even so, be aware that American Electric Power Company is showing 3 warning signs in our investment analysis , and 1 of those is potentially serious...
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