American Electric Power Stock Forum

Market caution due to lack of EPS growth, but sustained long-term growth could make the sell-off a potential opportunity. Three warning signs identified with American Electric Power Company.

The combination of a rather low ROE and significant use of debt is not particularly appealing. Investors should consider how the company might perform if it was unable to borrow so easily, as credit markets do change over time.

Factors such as the reported EPS drop may have unsettled investors, causing American Electric Power Company's shares to underperform. However, long-term returns and dividends eased some losses. Even the best stocks can sometimes underperform the market over a one-year period. Investors should heed warning signs for the company.

The company's ROE is not exciting as it's only similar to industry average; the significant usage of debt to increase returns elevates risk and reduces future options.

The federal grant supports AEP's resilience improvement actions, promising extensive customer benefits. Advancements are set to enhance outage management, flexibilize grid operation, and underline sustainability and net-zero emission efforts.

Despite American Electric Power's reinvestment, the declining returns and slow sales growth make its future prospects as a multi-bagger investment uncertain. Better multi-bagger opportunities might lie elsewhere according to trends.

Summary:
1. AEP reported Q1 2023 EPS of $1.11, matching JP Morgan's estimates and slightly beating Street median estimates but declining from last year due to weather impacts and higher O&M costs and taxes.
2. AEP reaffirmed its 2023 operating earnings guidance and long-term growth target, raised operating cash flow guidance, and maintained its capital plan of $40bn for 2023-2027 while planning to sell its NMRD JV, Retail, and Distributed Resources...