This company operates in the electric utility industry, providing services across vertically integrated utilities, transmission and distribution, transmission operations, and generation and marketing.
Business segments
10-K
Vertically Integrated Utilities SegmentTransmission And Distribution CompaniesTransmission OperationsGeneration And Marketing
Recent News
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Earnings call: Q1 2026 2026
Intel
Free
May 05, 2026Confident
● Full transcript on file
Bill Fehrman (Chief Executive Officer), Ashok Gupta (Executive Vice President and Chief Financial Officer)
Key metrics
Management highlighted 7 GW of quarter-over-quarter load-growth increase to 63 GW and a $78 billion five-year capital plan. The call also referenced more than $47 billion of expected operating cash flow over the five-year period and that the new $6 billion capital increase is only 18% equity content.[1]
Forward guidance
Management said it increased the five-year capital plan by $6 billion to $78 billion, driven by additional SPP and PJM transmission projects. It said this supports an expected long-term operating earnings CAGR of greater than 9% and that the company expects to generate over $47 billion of operating cash flow over the five-year period.[1]
Notable Q&A
One notable exchange centered on how the expanded capital plan would be funded and the implied equity burden; management responded that the $6 billion increase is only 18% equity content.[1] Another notable discussion focused on load growth and transmission opportunities, with management emphasizing
Surprise items
The most notable positive surprise was the $6 billion increase to the five-year capital plan, bringing it to $78 billion, alongside the upgraded long-term operating earnings CAGR target to greater than 9%.[1]
Q4 2025 (Feb 22, 2026) · Confident
Fundamentals
Signal
52-week high / low
$140.58 / $103.64
Forward P/E
19.7×
Trailing 20.0×
Dividend
$3.80 / share
Yield 2.80%
Analysts covering
21
Avg target $145.52
Beta
0.50
vs. S&P 500
Short interest
6.6%
Float shorted
Buy
54%
Hold
46%
Sell
0%
Wall Street consensus — sourced weekly via public disclosures
Analyst coverage data sourced from public filings. Xavier analyst thesis summary available after weekly Perplexity scan completes.
Financial summary — Gemini analysis
Signal
Revenue
$21,876 million
10.92% YoY
Operating margin
24.3%
Net income
$3,696 million
Free cash flow
-$1,509 million
Dividend / share
$3.74
Total debt
$48,830 million
Cash: $197 million
CapEx guidance
$12.2 billion for 2026, and $59.7 billion for 2027-2030
Earnings quality:HIGH
Recurring revenue:88%
Cash conversion:1.9x
Non-recurring items: Impact of the June 2025 FERC order related to the treatment of NOLCs in transmission formula rates, resulting in a $480 million decrease in GAAP earnings for AEP., Impairment of in-process internal use software development costs, resulting in a $52 million increase in expenses., Adjustment to the estimated loss on the sale of AEP OnSite Partners as a result of the contractual working capital true-up, resulting in a $10 million increase in income., Reduction in regulatory assets for OVEC-related purchased power costs as a result of approved legislation in Ohio, resulting in a $19 million reduction in regulatory assets.
Confidence 6.0 / 10 · 100% model agreement ·
Scheduled Jun 07, 2026
AEP is executing well on its growth thesis — a $72B+ five-year capex plan, 56 GW of contracted new load, constructive regulatory outcomes across key states, and a raised 7-9% long-term EPS growth target — but the stock at $129 is trading near the upper bound of most analyst fair value estimates and well below its 52-week high of $139, suggesting the market has already repriced much of the good news. At ~19x forward P/E on forward EPS of ~$6.30, valuation is not stretched for a utility with this growth profile, but the 7.53 short ratio is a meaningful contrarian signal and the neutral macro backdrop limits near-term upside. With no imminent catalyst in the next 5 trading days and analyst price targets ranging from $128-$138 (median ~$131), the risk/reward is balanced rather than compelling.
Strongest bull case
AEP's 56 GW contracted load backlog (up from 28 GW just months ago), a $72B capex plan yielding 10% rate base CAGR to $128B by 2030, and a freshly raised 7-9% long-term EPS growth rate represent a structural re-rating from income stock to growth utility — a shift not yet fully reflected in the forward multiple, especially given recent constructive regulatory settlements in Ohio, Kentucky, Arkansas, and West Virginia.
Strongest bear case
The short ratio of 7.53 — extremely elevated for a regulated utility — signals significant institutional skepticism, likely centered on execution risk: AEP's FFO-to-debt ratio sits at ~13.2%, below its own 14-15% target, and the $72B capex plan is nearly equal to the company's entire market cap, creating sustained financing risk from higher-for-longer interest rates and dilutive equity issuance. Additionally, some data center customers have already pulled out of signed load agreements, threatening the demand narrative underpinning the growth story.
What the market may be missing
The KKR/PSP Investments $2.82B transmission monetization deal closed June 5, 2026 — just days ago — injecting meaningful capital and validating AEP's infrastructure value at a time when the market may still be discounting the transmission asset base conservatively. This private-market validation at scale, combined with the possibility of further minority-interest transmission sales, could serve as a re-rating catalyst that the public equity market has not yet fully priced.
Mr. William J. Fehrman (CEO) · American Electric Power
Fehrman announced AEP expects to double its power generation to 63 gigawatts by 2030, driven primarily by data center demand in Ohio and Texas. He highlighted that 90% of the new power needs come from data centers, with 53 gigawatts required in those
“"Of the 63 gigawatts, 53 gigawatts are in Texas and Ohio, requiring large-scale transmission projects, which we believe we excel at constructing and operating. The remaining 10 gigawatts requires new ”
Mr. William J. Fehrman (CEO) · American Electric Power
AEP's contracted capacity is surging to 63GW, with 90% tied to data centers. Fehrman discussed advancing special tariffs for data centers in multiple states including Michigan, Oklahoma, and Texas. The call emphasized the utility's preparation for ma
CEO letter to shareholders
Signal
No shareholder letter on file for AEP
Some companies file their annual report without a separate CEO letter.
When available, Xavier extracts strategic themes, tone analysis, and
forward-looking statements to help you read between the lines.
Executive compensation
Signal
Name
Title
Total compensation
Trevor I. Mihalik
Executive Vice President and Chief Financial Officer
$13,481,299
Douglas A. Cannon
President - AEP Transmission
$6,692,775
Robert B. Berntsen
Executive Vice President, General Counsel, and Secretary
$5,465,229
Alicia R. Knapp
President - Nuclear Development
$4,368,980
Charles E. Zebula
Former Executive Vice President and Chief Financial Officer
$556,996
Source: DEF 14A proxy statement · 2026-03-18
Governance
Pro
Dual-class shares:No
Poison pill:No
Clawback policy:Yes
Stock ownership req.:Yes
Shareholder proposals
Election of the ten directors named in this proxy statement
FOR
Pending
Ratification of the appointment of PricewaterhouseCoopers LLP as the independent
FOR
Pending
Amendment of the Company’s Restated Certificate of Incorporation to increase the
11 agreements contain cross-default provisions — a covenant breach on one facility may trigger default on others.
Xavier risk radar
Pro
Covenant headroom
Moderate leverage — no covenants on file
Earnings quality
High quality (cash conversion 1.9x)
Risk trend
Risk increasing — The largest risk centers on AEP's ability to recover costs for substantial plann
Mgmt narrative
Management tone: Cautiously optimistic
Analyst drift
Consensus Buy — targets stable
Insider sentiment
Pattern detection — 90 days needed
Signal history
Signal
Date
Direction
Conf.
Agree.
Thesis
Price
Type
Jun 07, 2026
NEUTRAL
6.0/10
100%
AEP is executing well on its growth thesis — a $72B+ five-year capex plan, 56 GW of contracted new l...
$129.14
Sched.
May 31, 2026
NEUTRAL
5.9/10
100%
AEP's fundamental backdrop is genuinely strong — a $78B capital plan, >9% EPS CAGR through 2030, con...
$126.67
Sched.
May 24, 2026
NEUTRAL
6.4/10
67%
AEP screens as fairly valued to slightly full at about 19.5x earnings, which is reasonable for a def...
$131.59
Sched.
May 17, 2026
NEUTRAL
6.3/10
50%
AEP's fundamental story is genuinely strong — Q1 2026 EPS beat consensus by ~6%, a $78B capex plan t...
$125.15
Sched.
May 10, 2026
NEUTRAL
6.4/10
67%
AEP screens as reasonably valued for a regulated utility at about 19x earnings, but near-term upside...
$130.16
Sched.
May 03, 2026
NEUTRAL
6.0/10
100%
AEP screens as fairly valued to slightly full at about 20.6x trailing earnings while trading within ...
$136.91
Sched.
Apr 12, 2026
BULLISH
7.0/10
75%
AEP is trading near its 52-week high of $137.74 with a consensus price target of $137.47, suggesting...
$136.30
Sched.
Showing last 7 signals
AEPAmerican Electric Power Company
Signal
FY2026 annual report (10-K filed 2026-02-12)
INCOME STATEMENT
?Revenue
$21,876 million10.92% YoY
Total revenue from electricity generation, transmission, and natural gas distribution. Up 10.92% from last year. Management has guided capital spending of $12.2 billion for 2026, and $59.7 billion for 2027-2030.
?Operating income
$5,319 million
What remains after subtracting all operating costs — salaries, materials, rent, R&D — from revenue. This is the profit from actually running the business, before interest and taxes. Operating margin is 24.3%, meaning 24 cents of every dollar of revenue becomes operating profit.
?Net income
$3,696 million
The bottom line — what the company actually earned after all expenses, interest, and taxes. This is the number that gets divided by shares outstanding to calculate earnings per share (EPS), which directly affects the stock price. Net margin is 14.5%. Note: results include non-recurring items (impact of the june 2025 ferc order related to the treatment of nolcs in transmission formula rates, resulting in a $480 million decrease in gaap earnings for aep., impairment of in-process internal use software development costs, resulting in a $52 million increase in expenses.) that may not repeat.
?Free cash flow
-$1,509 million
Operating cash flow minus capital expenditure. This is the money available for dividends, share buybacks, debt repayment, or acquisitions. Free cash flow is what many professional investors consider the truest measure of financial health.
?EPS (diluted)
$1.60
Earnings per share — net income divided by total shares outstanding (including stock options and convertible bonds that could become shares). This is the single number most investors watch because it directly connects company profits to your ownership stake.
?Dividend per share
$3.74
Cash paid to shareholders each year for every share they own. Utilities are classic dividend stocks — regulated returns provide predictable, above-average yields.
BALANCE SHEET
?Total assets
$117.8B
Everything the company owns — cash, factories, equipment, patents, inventory, investments. Includes power plants, transmission lines, natural gas pipelines, and renewable energy facilities.
?Cash & equivalents
$197 million
Money available right now — bank accounts, money market funds, short-term government bonds. This is the company's financial cushion. More cash means more flexibility to invest, acquire, or survive a downturn without borrowing.
?Total debt
$48,830 million
All money the company owes — bonds, bank loans, credit facilities. Compare this to cash to understand the net debt position. The company holds $197 million in cash against this debt.
?Shares outstanding
537,467,865
Total number of shares that exist — owned by all investors, insiders, and institutions combined. When the company reports EPS, this is the denominator. Share buybacks reduce this number, which increases EPS even without earnings growth.
?Debt-to-equity ratio
1.6%
How much debt the company uses for every dollar of shareholder equity. Under 100% means more equity than debt (conservative). Over 200% means heavy leverage. Banks and utilities naturally run higher ratios.
CASH FLOW
?Operating cash flow
$1.5B
Actual cash generated from running the business — not accounting profits, real money coming in the door. This is more trustworthy than net income because it's harder to manipulate. A company can report profits but still run out of cash.
EARNINGS QUALITY
?Accrual quality
HIGH
Measures how well reported earnings match actual cash generation. HIGH means earnings are backed by real cash. LOW means the company may be using accounting techniques to inflate reported numbers. Professional investors check this before trusting EPS.
?Recurring revenue
88%
88% of revenue comes from repeat sources — ongoing contracts, subscriptions, or regular customer purchasing patterns rather than one-time sales. Higher recurring revenue means more predictable future earnings.
?Cash conversion
1.9x
Operating cash flow divided by net income. Above 1.0x means the company generates more cash than it reports in profits — a sign of high-quality earnings. At 1.9x, the company is generating significantly more cash than reported profits — very healthy.
?Non-recurring items
4 identified
One-time items that affect the bottom line but won't repeat: impact of the june 2025 ferc order related to the treatment of nolcs in transmission formula rates, resulting in a $480 million decrease in gaap earnings for aep., impairment of in-process internal use software development costs, resulting in a $52 million increase in expenses., adjustment to the estimated loss on the sale of aep onsite partners as a result of the contractual working capital true-up, resulting in a $10 million increase in income., reduction in regulatory assets for ovec-related purchased power costs as a result of approved legislation in ohio, resulting in a $19 million reduction in regulatory assets.. When evaluating the company's true earning power, investors strip these out to see what the business earns on a normal basis.
?Management tone
Cautious Optimistic
How management sounds in their SEC filings — are they confident, cautious, or defensive? This is analyzed from the actual language used in the 10-K annual report. A shift in tone from prior years can signal changing conditions before the numbers reflect it.
?Top risk factor
Increasing
The largest risk centers on AEP's ability to recover costs for substantial planned capital investments and additions, particularly for new generation and transmission facilities to meet accelerating demand from data centers and other large load customers, combined with inherent execution risks in project construction and uncertain capital market funding capacity. Risk trend: increasing. This is the single biggest threat to the company's future earnings as identified in their SEC filing.
Click any row to expand the plain-English explanation. Source: SEC EDGAR XBRL filings.
Capital intelligence
Signal
Weighted Average Cost of Capital · Return on Invested Capital · Economic Value Added
ROIC
6.19%
WACC
4.47%
🟡 NEUTRAL — EVA Spread: 1.72%
?WACC
4.47%
Weighted Average Cost of Capital — the minimum return American Electric Power Company must earn on its investments to satisfy both debt holders and shareholders. Computed from a 58.96% equity / 41.04% debt capital structure. If the company earns less than 4.47% on its invested capital, it is destroying shareholder value.
?Cost of equity
7.02%
The return shareholders demand for holding AEP stock instead of a risk-free Treasury bond. Computed using the Capital Asset Pricing Model: Risk-Free Rate (4.25%) + Beta (0.50) × Equity Risk Premium (5.50%). A beta of 0.50 means AEP is less volatile than the overall market.
?Cost of debt (after-tax)
0.81%
What American Electric Power Company effectively pays on its borrowed money after the tax deduction on interest. Interest is tax-deductible, so the true cost is lower than the stated rate. Effective tax rate used: 5.21%.
?Capital structure
E: 58.96% / D: 41.04%
How American Electric Power Company finances its operations — the split between equity (stock market value: $73.4B) and debt (total borrowings: $51.1B). More debt means more leverage — higher potential returns but higher risk.
?ROIC
6.19%
Return on Invested Capital — how efficiently American Electric Power Company turns its total invested capital into after-tax operating profit. NOPAT ($5.1B) ÷ Invested Capital ($82.6B). This exceeds WACC, meaning the company creates value for shareholders.
?EVA
$1.4B
Economic Value Added — the dollar amount of value American Electric Power Company created (or destroyed) above its cost of capital. NOPAT ($5.1B) minus the capital charge (Invested Capital × WACC = $3.7B). Positive EVA means every dollar of capital is earning more than it costs.
?NOPAT
$5.1B
Net Operating Profit After Tax — operating income adjusted for taxes, ignoring how the company is financed. Operating Income ($5.4B) × (1 - Tax Rate 5.21%). This isolates the company's core business profitability from its financing decisions.
Xavier consensus signals are intelligence outputs, not investment advice. All signals are generated by a multi-model AI system and reflect public information at time of generation. Past signal accuracy does not guarantee future performance. Wall Street analyst consensus sourced from public disclosures, summarized weekly. Financial data sourced from SEC EDGAR and yfinance. Insider transactions sourced from SEC EDGAR Form 4 filings. Updated Jun 07, 2026.