AEP Utilities - Regulated Electric
American Electric Power Company, Inc.
American Electric Power is a utility holding company whose subsidiaries generate, transmit, and distribute electricity to more than five million retail customers in 11 states, from Ohio and Virginia to Texas and Louisiana. It owns about 38,000 circuit miles of transmission lines and about 25,000 MW of regulated generating capacity. FY2025 revenue was $21.9 billion and earnings attributable to common shareholders $3.6 billion. Rates are set by state commissions and FERC to recover costs plus an allowed return, so earnings grow with investment: AEP outlined a $72 billion five-year capital plan aimed at the load growth it says is driven largely by data centers and other large customers.
Last updated
Analysis last edited: October 4, 2026 · Financial data fetched: October 3, 2026 15:29 (SEC EDGAR) · Source 10-K filed: February 12, 2026
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
01
Company profile
- Legal name
- AMERICAN ELECTRIC POWER CO INC
- Headquarters
- COLUMBUS, OH
- Incorporated in
- New York
- Fiscal year end
- 12/31
- Exchange & ticker
- NASDAQ: AEP
- Industry
- Utilities - Regulated Electric
- CIK
- 4904
- Website
- https://www.aep.com/ ↗
Workforce (as of FY2025 year-end)
Employees
17,581
Source: Form 10-K (FY2025) cover page and business description
02
Earnings calendar
When the company reports each quarter: the quarter-end date, the day results were released, and when the 10-Q or 10-K was filed.
Next report
Q3 FY2026
Quarter end: September 2026. In past years, Q3 results were released 29–37 days after quarter end (Oct 29, 2025; Nov 6, 2024; Nov 2, 2023). No date has been announced in the sources this site uses.
Reporting pattern
- Fiscal year ends around December 31.
- Reports four times a year: three quarterly reports (10-Q) and an annual report (10-K) for Q4.
- Earnings releases came 29–57 days after quarter end over the last 12 quarters.
| Quarter | Quarter ended | Earnings release (8-K) | Report filed (10-Q / 10-K) |
|---|---|---|---|
| Q2 FY2026 | Jun 30, 2026 | Jul 30, 2026 (+30 days) | Jul 30, 2026 10-Q (+30 days) |
| Q1 FY2026 | Mar 31, 2026 | May 5, 2026 (+35 days) | May 5, 2026 10-Q (+35 days) |
| Q4 FY2025 | Dec 31, 2025 | Feb 12, 2026 (+43 days) | Feb 12, 2026 10-K (+43 days) |
| Q3 FY2025 | Sep 30, 2025 | Oct 29, 2025 (+29 days) | Oct 29, 2025 10-Q (+29 days) |
| Q2 FY2025 | Jun 30, 2025 | Jul 30, 2025 (+30 days) | Jul 30, 2025 10-Q (+30 days) |
| Q1 FY2025 | Mar 31, 2025 | May 6, 2025 (+36 days) | May 6, 2025 10-Q (+36 days) |
| Q4 FY2024 | Dec 31, 2024 | Feb 13, 2025 (+44 days) | Feb 13, 2025 10-K (+44 days) |
| Q3 FY2024 | Sep 30, 2024 | Nov 6, 2024 (+37 days) | Nov 6, 2024 10-Q (+37 days) |
| Q2 FY2024 | Jun 30, 2024 | Jul 30, 2024 (+30 days) | Jul 30, 2024 10-Q (+30 days) |
| Q1 FY2024 | Mar 31, 2024 | Apr 30, 2024 (+30 days) | Apr 30, 2024 10-Q (+30 days) |
| Q4 FY2023 | Dec 31, 2023 | Feb 26, 2024 (+57 days) | Feb 26, 2024 10-K (+57 days) |
| Q3 FY2023 | Sep 30, 2023 | Nov 2, 2023 (+33 days) | Nov 2, 2023 10-Q (+33 days) |
Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.
03
Flagship products & services
Vertically Integrated Utilities
Generation and delivery
Examples: Cook nuclear plant (I&M), Rockport Plant, acquired Green Country gas plant
Integrated utilities in ten states.
Transmission and Distribution Utilities
Electricity delivery
Examples: AEP Texas, AEP Ohio
Wires only, in restructured markets.
AEP Transmission Holdco
High-voltage transmission
Examples: State Transcos, including about 2,000 circuit miles of 765 kV lines across AEP
FERC-regulated transmission.
Generation & Marketing
Competitive power
Examples: AEP Energy retail
Marketing and retail in ERCOT, MISO, PJM, SPP.
Business descriptions are from the FY2025 Form 10-K's Item 1 and segment note.
04
Recent strategic focus
FY2025 developments from the 10-K.
Buying generation
AEP's utilities acquired six plants (2,183 MW) in 2025, including the 904 MW Green Country gas plant, adding 2.2 GW of owned capacity; generation facility acquisitions used $3.45B of cash.
Source: Form 10-K (FY2025) MD&A and cash flow statement
Selling a minority stake in transmission
AEP sold 19.9% of Midwest Transmission Holdings to KKR and PSP for $2.82B to help finance the capital plan.
Source: Form 10-K (FY2025) Note 7
Data center load
Commercial sales rose in 2025 mainly because new data processing loads came online; AEP projects peak demand growth by 2030, especially in Indiana, Ohio, Oklahoma, and Texas.
Source: Form 10-K (FY2025) MD&A
Capex ÷ D&A (FY2025)
2.54x
Well above depreciation — expansion-stage investment
formulacapital expenditures ÷ depreciation & amortization
e.g.$8,453M ÷ $3,325M = 2.54x
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
Where the money goes, over time
Unit: $M. Capex went from $5.66B in FY2021 to $8.45B in FY2025
- Capex
formulacapital expenditures ÷ depreciation & amortization
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
05
Key figures at a glance
FY2021–FY2025, 5 years.
Revenue (FY2025)
$21.88B
As reported in the 10-K
Revenue CAGR (4 years)
+6.8%▲favorable
formula(last-period revenue ÷ first-period revenue) ^ (1 ÷ years) − 1
e.g.($21,876M ÷ $16,792M) ^ (1÷4) − 1 = 6.8%
termsCAGR · ^ (exponent) · Revenue (net sales)
Operating margin (FY2025)
24.3%▲favorable
+4.0pt vs. 4 years ago
formulaoperating income ÷ revenue × 100
e.g.$5,319M ÷ $21,876M × 100 = 24.3%
ROE (FY2025)
12.7%▲favorable
5-year average: 10.8%
As reported in the 10-K
P/B (FY2025 end)
2.00x
formulaP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share)
e.g.17.3x × $6.66 ÷ $57.57 = 2.00x
Period-end (fiscal year-end) value, not today's P/B
EV/EBITDA (FY2025 end)
13.1x
formula(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization)
e.g.($63,978M + $49,435M − $197M) ÷ ($5,319M + $3,325M) = 13.1x
termsEV/EBITDA · Market capitalization · Interest-bearing debt · EBITDA · Depreciation & amortization (D&A)
Period-end (fiscal year-end) value, not today's multiple
- ▲
Revenue grew +6.8% a year over 4 years (strong growth)
From $16.79B in FY2021 to $21.88B in FY2025. The annualized rate (CAGR) makes it possible to compare growth pace across companies of different sizes.
- ▲
Operating margin improved: 20.3% → 24.3%
How much operating profit is left per $100 of revenue. It moved +4.0 points over 4 years — pricing power, cost control, and product mix all show up here.
- ▼
Equity ratio is 27.2% (relatively heavy reliance on debt)
The share of total assets funded by equity rather than debt. 50%+ is often read as low bankruptcy risk, though the right level varies by industry (real estate and leasing run lower, for instance).
- ▼
Free cash flow was positive in 0 of 5 years
Operating cash flow minus capital expenditures: the cash left over after funding the business’s own investment, available for dividends, buybacks, acquisitions, or debt paydown. A negative year can mean heavy investment, or weak core earnings — worth distinguishing.
- ▲
ROE averaged 10.8% over 5 years (latest: 12.7%)
How much profit was generated on shareholders’ equity. Roughly 10%+ is often cited as solid for a U.S. company, though this varies a lot by industry and capital intensity.
06
Business model
Vertically Integrated Utilities
Utilities that generate, transmit, and distribute electricity to retail and wholesale customers in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Oklahoma, Tennessee, Texas, Virginia, and West Virginia (Appalachian Power, Indiana Michigan Power, Public Service Company of Oklahoma, SWEPCo, and others), under rates approved by state commissions.
01 what it draws on
Inputs & resources
- About 25,400 MW of owned generation, including the Cook nuclear plant
- Coal, natural gas, and nuclear fuel
- Capital from debt and AEP equity
02 what it does
Activities
- Generating, transmitting, and distributing electricity
- Adding generation, including acquired wind, solar, and gas plants
03 who it serves
Customers
- Residential, commercial, and industrial customers, plus other utilities, cooperatives, and municipalities at wholesale
04 how money comes in
How it earns
- Regulated rates set to recover costs and earn an allowed return; fuel costs generally recovered through fuel mechanisms
Vertically Integrated Utilities: how it makes money
- Revenue $12.8B and earnings $1.6B in FY2025, the largest segment by both.
- Generation in 2025: 43% coal and lignite, 22% natural gas, 19% nuclear, 16% renewables (net generation basis).
- 2026 budgeted capex of $6.7B, plus $30.5B for 2027–2030.
Transmission and Distribution Utilities
AEP Texas and AEP Ohio deliver electricity over their wires but don't generate it for retail customers, because Texas (ERCOT) and Ohio restructured their markets. AEP Ohio buys energy and capacity at auction for customers who haven't switched suppliers.
01 what it draws on
Inputs & resources
- Transmission and distribution networks in Texas and Ohio
02 what it does
Activities
- Delivering electricity
03 who it serves
Customers
- About 1.1 million retail customers (AEP Texas) and 1.5 million (AEP Ohio)
04 how money comes in
How it earns
- Regulated delivery rates
Transmission and Distribution Utilities: how it makes money
- Revenue $6.1B and earnings $816M in FY2025.
- AEP Texas has signed letters of agreement for an incremental 36 GW of load by 2030.
AEP Transmission Holdco
FERC-regulated transmission-only companies (the State Transcos) plus transmission joint ventures, which build and operate high-voltage lines and earn FERC- or PUCT-approved returns.
01 what it draws on
Inputs & resources
- Transmission assets in PJM and SPP
02 what it does
Activities
- Building, replacing, and operating transmission
03 who it serves
Customers
- Mostly other AEP companies: $1.9B of its $2.4B FY2025 revenue came from other AEP segments
04 how money comes in
How it earns
- FERC formula rates with allowed ROEs of 9.85%–10.50%
AEP Transmission Holdco: how it makes money
- Revenue $2.4B (of which $1.9B from other AEP segments) and earnings $1.16B in FY2025 — the highest earnings relative to revenue of the four segments.
- 2025 earnings include a favorable FERC order on net operating loss carryforwards covering 2021–2024.
Generation & Marketing
Competitive (non-regulated) power marketing, risk management, and retail electricity in ERCOT, MISO, PJM, and SPP, plus competitive generation in PJM.
01 what it draws on
Inputs & resources
- Competitive generation in PJM
- Purchased power
02 what it does
Activities
- Marketing and retail power sales
03 who it serves
Customers
- Retail and wholesale customers in competitive markets
04 how money comes in
How it earns
- Market-based prices
Generation & Marketing: how it makes money
- Revenue $2.8B and earnings $287M in FY2025.
- AEP sold its competitive contracted renewables portfolio in 2023 for about $1.2B.
Revenue by segment (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue, margin = segment profit ÷ segment revenue × 100
Vertically Integrated Utilities
12,819 (53%)profit 1,605 · margin 12.5%
Transmission and Distribution Utilities
6,147 (26%)profit 816 · margin 13.3%
AEP Transmission Holdco
2,377 (10%)profit 1,161 · margin 48.8%
Generation & Marketing
2,762 (11%)profit 287 · margin 10.4%
Source: Form 10-K (FY2025) — Note 9, Business Segments Profit is earnings attributable to AEP common shareholders by segment. Revenue includes sales to other AEP segments ($2,373M eliminated in consolidation, mostly AEP Transmission Holdco's $1,884M). Corporate and Other (a $289M loss) isn't shown.
07
Contract structure
Short-term or spot sales carry different earnings quality than long-term or auto-renewing contracts — this shows how the company actually contracts with its customers.
Most revenue comes from regulated rates approved by the FERC and the state commissions of 11 states. Rates are designed to recover costs and earn an authorized return on equity — 9.25% to 10.50% across AEP's jurisdictions — so revenue depends on rate decisions, weather-driven sales, and how much capital the utilities invest. Coal, gas, and purchased power costs are typically recovered through fuel mechanisms.
- Multi-year / recurring
State-regulated retail rates
Most of FY2025 revenue
Typical term: Set in base rate cases; authorized ROEs of 9.25%–9.86% by state
Fuel costs generally recovered through fuel reconciliation mechanisms.
- Annual contract
FERC formula transmission rates
AEP Transmission Holdco: $2.4B segment revenue
Typical term: Cost-based formula rates on file at the FERC
Authorized ROEs of 9.85%–10.50%.
- Multi-year / recurring
Large-load (data center) tariffs
Not disclosed
Typical term: Contract lengths of up to 20 years, with take-or-pay minimums of as much as 90% of contracted demand
Filed in eight jurisdictions, four approved as of the 10-K.
08
Alliances & capital ties
Equity stakes, joint ventures, and strategic partnerships disclosed across the 10-K, 8-Ks, and proxy statement.
Capital tie / equity stake
KKR and PSP Investments
In June 2025 an entity controlled by funds managed by KKR and by the Public Sector Pension Investment Board bought a 19.9% noncontrolling interest in Midwest Transmission Holdings (owner of AEP's Ohio and Indiana Michigan transmission companies) for $2.82B; AEP received about $2.78B net and used it to help fund the capital plan.
Business partnership
Gigawatt AI, Inc.
In August 2025 AEP invested $100M for a 10% stake in GWAI, which develops AI-centric software to optimize utility operations, with a warrant for 5% more and up to $100M of further milestone-based investment ($25M of which was made in January 2026). AEP also acquired a perpetual license to GWAI's software.
Source: Form 10-K (FY2025) — Note 18, Variable Interest Entities and Equity Method Investments
09
Customers & suppliers
Who the company sells to and buys from. Companies rarely name either, so named counterparties come only from the company's own filings and press releases; otherwise this lists the concentration figures the 10-K discloses.
Customers
More than five million retail customers in 11 states, plus wholesale customers (other utilities, rural cooperatives, municipalities) and transmission customers on the PJM, SPP, and ERCOT grids. Industries served include chemicals, petroleum and coal products, metals, and data processing.
Named by the company
No customer is named as material.
What the filings disclose
- The largest retail customer bases are AEP Ohio (about 1,547,000), AEP Texas (1,133,000), and Appalachian Power (971,000). (Form 10-K (FY2025), Item 1)
- Commercial sales rose in 2025 mainly because new data processing loads came online. (Form 10-K (FY2025), MD&A)
Suppliers
Fuel (coal, natural gas, uranium) and purchased power, with fuel costs typically recovered through fuel mechanisms.
Named by the company
- Bloom Energy — In Q4 2024 an AEP subsidiary agreed to buy 100 MW of solid oxide fuel cells to be installed at commercial customers' sites in Ohio.Form 10-K (FY2025) — Note 18, Variable Interest Entities and Equity Method Investments
What the filings disclose
- Coal contracts with suppliers run through 2031 for a portion of projected needs; the average delivered cost was $54.86 a ton in 2025, down 11.6%. (Form 10-K (FY2025), Item 1)
- Average delivered natural gas price rose to $3.71/MMBtu in 2025 from $3.05. (Form 10-K (FY2025), Item 1)
- Purchased electricity, fuel, and other generation consumables cost $7.0B in FY2025. (Form 10-K (FY2025), Note 9)
10
Competitors & peers
Competitors the 10-K names, and the peer group the company itself chose in its proxy statement. Nothing here is this site's own pick.
AEP's 10-K says its vertically integrated utilities compete with customers' self-generation and with other energy sources such as natural gas, fuel oil, renewables, and coal, and its Generation & Marketing business competes to sell power and capacity in competitive markets. No company is named.
Competitors named in the 10-K
AEP's 10-K doesn't name competitors.
Peer group the company chose
2025 Compensation Peer Group, from the proxy statement. Peers are companies the board considers comparable — for example when setting executive pay — not necessarily direct competitors.
Mostly utility companies plus several non-utility companies, selected on revenue and market capitalization; AEP was slightly above the group's median on both.
- 3Msite ↗
- General Dynamicssite ↗
- CenterPoint Energysite ↗
- NextEra Energysite ↗
- Consolidated Edisonsite ↗
- Northrop Grummansite ↗
- Constellation Energysite ↗
- PG&Esite ↗
- Delta Air Linessite ↗
- PPLsite ↗
- Dominion Energysite ↗
- PSEGsite ↗
- DTE Energysite ↗
- Semprasite ↗
- Duke Energysite ↗
- AES Corporationsite ↗
- Edison Internationalsite ↗
- Sherwin-Williamssite ↗
- Entergysite ↗
- Southern Companysite ↗
- Eversource Energysite ↗
- Waste Managementsite ↗
- Exelonsite ↗
- Xcel Energysite ↗
- FirstEnergysite ↗
Company names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.
11
M&A history
Companies acquired over the last five years, plus older large acquisitions that still anchor a current business — what each was bought to do, and what happened afterward. From the 10-K, 8-Ks, and the company's press releases.
AEP mostly buys newly built power plants for its regulated utilities (treated as asset acquisitions) and has sold non-core or minority interests to fund its capital plan.
May–Aug 2025
Green Country (gas), Pixley (solar), Flat Ridge IV and V (wind) — bought by PSO
$1.7B aggregate
Four plants totaling 1,381 MW in Oklahoma and Kansas, including the 904 MW Green Country combined-cycle gas plant.
- Stated purpose (company)
- Acquired to strengthen PSO's generation portfolio and enhance reliability; the 10-K says the purchases reflect a focus on securing generation to meet future customer demand.
Nov–Dec 2025
Top Hat (APCo) and Wagon Wheel (SWEPCo) wind facilities
Not disclosed separately; property recorded of $562M and $1,272M
Newly built wind facilities of 204 MW in Illinois and 598 MW in Oklahoma.
- Stated purpose (company)
- Part of securing generation to meet future customer demand; costs recoverable through riders until reflected in base rates.
Pending (expected Q1 2026)
Oregon Generation Plant — to be bought by I&M
Not disclosed
An 870 MW combined-cycle gas plant near Toledo, Ohio.
- Stated purpose (company)
- Listed in the 10-K under new generation resources to meet increasing customer demand; the IURC granted approval in November 2025.
Jun 2025 (sale)
19.9% of Midwest Transmission Holdings — sold to KKR and PSP
$2.82B
A minority stake in AEP's Ohio and Indiana Michigan transmission companies.
- Stated purpose (company)
- Net proceeds of about $2.78B were used to help finance AEP's capital plan.
Aug 2023 (sale)
Competitive contracted renewables portfolio
About $1.2B net proceeds
AEP Renewables' contracted renewables portfolio in the Generation & Marketing segment.
- Stated purpose (company)
- Sold after a process announced in February 2022; AEP recorded a $73M after-tax loss.
Prices are as disclosed in the FY2025 10-K. AEP also sold AEP OnSite Partners in 2024 (about $318M net proceeds, used to pay down short-term debt).
12
Five years of financials
Each chart's axis holds a single unit (never mixing dollars, %, and $/share). The table's per-period header links to the filing the numbers came from.
Revenue over time
Unit: $M
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
Profit over time (operating → net)
Unit: $M
- Operating income
- Pretax income
- Net income
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
Margins over time
Unit: %
- Operating margin
- Net margin
formulaoperating income ÷ revenue × 100
formulanet income attributable to the company ÷ revenue × 100
Cash flow over time
Unit: $M (below zero = cash went out)
- Operating CF
- Investing CF
- Free CF
formulacash flow from operations − capital expenditures
termsFree cash flow (FCF) · Cash flow from operations (operating CF) · Capital expenditures (capex)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
Financial stability & capital efficiency
Unit: %
- Equity ratio
- ROE
formulatotal equity ÷ total assets × 100 (as reported in the 10-K)
termsStockholders’ equity · Total assets
formulanet income ÷ average equity (beginning + ending, ÷2) × 100 (as reported in the 10-K)
termsNet income (attributable to the company) · Stockholders’ equity
Earnings per share (EPS) and dividend per share
Unit: $
- EPS
- Dividend per share
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
| Line item | FY202110-K on EDGAR ↗ | FY202210-K on EDGAR ↗ | FY202310-K on EDGAR ↗ | FY202410-K on EDGAR ↗ | FY202510-K on EDGAR ↗ |
|---|---|---|---|---|---|
| Income statement ($M) | |||||
| Revenue | 16,792 | 19,640 | 18,982 | 19,721 | 21,876 |
| Operating income | 3,411 | 3,483 | 3,556 | 4,304 | 5,319 |
| Pretax income | 2,600 | 2,310 | 2,268 | 2,937 | 3,825 |
| Net income (attributable) | 2,488 | 2,306 | 2,213 | 2,976 | 3,696 |
| Revenue growthcalc(this year’s revenue − last year’s revenue) ÷ last year’s revenue × 100 | — | 17.0% | -3.3% | 3.9% | 10.9% |
| Operating margincalcoperating income ÷ revenue × 100 | 20.3% | 17.7% | 18.7% | 21.8% | 24.3% |
| Net margincalcnet income attributable to the company ÷ revenue × 100 | 14.8% | 11.7% | 11.7% | 15.1% | 16.9% |
| Balance sheet ($M) | |||||
| Total assets | 87,669 | 93,403 | 96,684 | 103,078 | 114,460 |
| Total equity | 22,680 | 24,123 | 25,286 | 26,986 | 32,218 |
| Interest-bearing debtSum of short- and long-term borrowings, notes/bonds payable | 37,433 | 43,775 | 44,911 | 46,785 | 49,435 |
| Equity ratio | 25.6% | 25.6% | 26.1% | 26.1% | 27.2% |
| ROE | 11.1% | 10.0% | 9.0% | 11.4% | 12.7% |
| Cash flow ($M) | |||||
| Operating CF | 3,840 | 5,288 | 5,012 | 6,804 | 6,944 |
| Investing CF | -6,434 | -7,752 | -6,267 | -7,596 | -11,939 |
| Financing CF | 2,607 | 2,569 | 1,077 | 659 | 5,017 |
| Free cash flowcalccash flow from operations − capital expenditures | -1,820 | -1,384 | -2,366 | -827 | -1,509 |
| Cash and equivalents | 403 | 509 | 330 | 203 | 197 |
| Per share & other | |||||
| EPS ($) | 4.96 | 4.49 | 4.24 | 5.58 | 6.66 |
| BVPS ($) | 44.49 | 46.50 | 47.98 | 50.56 | 57.57 |
| Dividend per share ($) | 3.00 | 3.17 | 3.37 | 3.57 | 3.74 |
| Payout ratiocalcdividend per share ÷ diluted EPS × 100 | 60.5% | 70.6% | 79.5% | 64.0% | 56.2% |
| P/E (x) | 17.9 | 21.2 | 19.2 | 16.5 | 17.3 |
| EV/EBITDA (x)calc(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization) | 13.3 | 14.0 | 13.4 | 12.9 | 13.1 |
| P/B (x)calcP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share) | 2.00 | 2.04 | 1.69 | 1.82 | 2.00 |
P/B and EV/EBITDA use each period’s period-end (fiscal year-end) figures, not the current share price. Figures without a "calc" tag are as reported in the Form 10-K (five-year selected financial data and the consolidated financial statements), pulled automatically from SEC EDGAR. Where a later filing restated a prior period, the restated figure is used.
13
Is ROIC above WACC?
ROIC (the return on money invested in the business) above WACC (the cost of raising that money) means the company is creating value. WACC is an estimate, so its assumptions can be adjusted below.
ROIC (FY2025)
5.4%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
e.g.$5,319M × (1 − 21%) ÷ $77,712M × 100 = 5.4%
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
WACC (this site’s estimate)
4.51%
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
e.g.Equity weight: $63.98B ÷ ($63.98B + $49.44B) = 56.4%
e.g.Debt weight: $49.44B ÷ ($63.98B + $49.44B) = 43.6%
e.g.WACC: 5.5% × 56.4% + 4.1% × (1 − 21%) × 43.6% = 4.51%
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
WACC 4.51% is this site’s estimate under the assumptions below (not a figure the company has published)
- Risk-free rate
- 4%
- β
- 0.27 (price-derived adjusted beta, but correlation with the market is low (R² 0.01), so reliability is limited)
- Equity risk premium
- 5.5%
- Cost of equity
- 5.49%
- Cost of debt
- 4.10%
- Effective tax rate
- 21%
- Capital structure (equity : debt)
- 56% : 44%
ROIC over time, vs. WACC
Unit: % — bars = each period's ROIC, horizontal line = latest WACC. Bars above the line are green, below are red
- ROIC (above WACC)
- ROIC (below WACC)
- WACC 4.51%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
Try different WACC assumptions
β and the equity risk premium are estimates with a real range of plausible values — move the sliders to check whether ROIC > WACC still holds. The defaults reflect 2026-09.
Initial β: 0.27 (price-derived adjusted beta. Raw β -0.08, R² 0.01, 130 weeks)
formula0.67 × β + 0.33 (β = the slope of weekly stock returns regressed on weekly market returns)
e.g.0.67 × -0.083 + 0.33 = 0.274
termsβ (beta)
Period 2024-04-05–2026-10-02, using S&P 500 ETF (SPY) as the market proxy. Source: Yahoo Finance price history.
formularisk-free rate + β × equity risk premium
e.g.4.0% + 0.27 × 5.5% = 5.5%
termsCAPM · Risk-free rate · β (beta) · Equity risk premium (market risk premium)
formulaP/E × net income ≈ period-end share price × shares outstanding (= market cap)
termsP/E · Net income (attributable to the company) · Market capitalization · Market value of equity
formulainterest expense ÷ interest-bearing debt × 100 (clamped to 0–10%; falls back to the risk-free rate if there’s no debt)
14
What the price implies (DCF)
A company's value can be written as its free cash flow divided by (cost of capital − perpetual growth). Working that backwards from the market's valuation shows how much growth the share price assumed — compared here with the company's actual past growth.
Not enough data for this calculation (FY2025): it needs positive free cash flow, a fiscal year-end P/E, and a positive enterprise value.
15
Earnings quality
The same reported profit can mean different things depending on whether it's backed by cash, driven by the core business, or the result of a one-off item. Four checks below.
- ✓
Operating CF ÷ net income: averages 2.05x
Profit is backed by cash coming in.
- ✓
Accrual ratio (latest): -3.0%
A small share of profit rests on accounting estimates.
- ✓
Core-earnings share (operating income ÷ pretax income): 139%
Most profit comes from core operations.
- ✓
Days sales outstanding: 42 → 48 days
No major slowdown in collecting on sales.
Operating CF vs. net income
Unit: $M — operating CF above net income means profit is backed by cash
- Operating CF
- Net income
formulacash flow from operations ÷ net income attributable to the company
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formula(net income − operating CF) ÷ average total assets × 100
termsNet income (attributable to the company) · Cash flow from operations (operating CF) · Total assets
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
Profit bridge (FY2025)
Unit: $M — what moved profit from operating income to net income
- Profit (each stage)
- Pushed profit up
- Pushed profit down
formulaoperating income ÷ income before income taxes × 100
termsOperating income · Income before income taxes (pretax income)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-02-12
Receivables & inventory days
Unit: days — days grow when receivables or inventory build up faster than sales
- Days sales outstanding
formulaperiod-end receivables ÷ revenue × 365
formulaperiod-end inventory ÷ revenue × 365
termsInventory · Revenue (net sales)
Worked examples (latest period)
formulacash flow from operations ÷ net income attributable to the company
e.g.$6,944M ÷ $3,696M = 1.88x
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formulaoperating income ÷ income before income taxes × 100
e.g.$5,319M ÷ $3,825M × 100 = 139%
termsOperating income · Income before income taxes (pretax income)
formulaperiod-end receivables ÷ revenue × 365
e.g.$2,867M ÷ $21,876M × 365 = 48 days
16
Strengths & weaknesses
Strengths
1. Rate-regulated earnings that grow with investment
Rates are set to recover costs plus an authorized return on equity, and AEP outlined a $72B five-year capital plan, which expands the base on which it earns.
Evidence: Form 10-K (FY2025) Item 1 and MD&A
2. Large transmission footprint
About 38,000 circuit miles of transmission, including about 2,000 circuit miles of 765 kV lines; the transmission holdco earned $1.16B on $2.4B of revenue in FY2025.
Evidence: Form 10-K (FY2025) MD&A and Note 9
3. Dividend raised every year
Dividends declared per share rose from $3.00 (FY2021) to $3.74 (FY2025).
Evidence: SEC EDGAR XBRL
4. Protections in new large-load contracts
New data center and large-load tariffs include contracts of up to 20 years and take-or-pay minimums of up to 90% of contracted demand, designed to protect existing customers from the cost of building for those loads.
Evidence: Form 10-K (FY2025) MD&A
Weaknesses
1. Capital spending exceeds cash flow
Construction expenditures of $8.5B plus $3.5B of generation facility acquisitions in FY2025, against operating cash flow of $6.9B; the gap is funded with debt, equity, and asset sales.
Evidence: Form 10-K (FY2025) cash flow statement
2. Heavy debt load
Interest-bearing debt was about $49B at FY2025 year-end and interest expense $2.0B, about 38% of operating income.
Evidence: SEC EDGAR XBRL
3. Coal-heavy generation mix
Coal and lignite supplied 43% of the Vertically Integrated Utilities' net generation in 2025, up from 37% in 2023, which keeps environmental rules for coal plants (such as the EPA's CCR rule, which raised 2024 costs) relevant.
Evidence: Form 10-K (FY2025) Item 1 and MD&A
4. Earnings include one-time items
2025 GAAP earnings of $3,580M included a $480M benefit from a FERC order on net operating loss carryforwards covering 2021–2024; AEP's non-GAAP operating earnings were $3,190M.
Evidence: Form 10-K (FY2025) MD&A, reconciliation of GAAP to operating earnings
17
What draws investors to it
Why the stock can look attractive to investors — each point paired with what has to hold for it to stay true, and the opposing view. This is this site's analysis, not a recommendation to buy or sell.
P/E (FY2025)
17.3x
Price at fiscal year-end ÷ diluted EPS
Dividend yield (FY2025)
3.24%
Dividends per share ÷ fiscal year-end price
Payout ratio (FY2025)
56%
Dividends per share ÷ diluted EPS
FCF yield (FY2025)
-2.4%
(Operating CF − capex) ÷ market cap
1. Regulated growth tied to data center demand
Earnings grow with the rate base, and AEP's $72B five-year plan is aimed at load growth driven largely by data centers. Diluted EPS rose from $4.96 (FY2021) to $6.66 (FY2025).
- What has to hold
- The projected large loads connect, and regulators approve recovery of the investment at reasonable returns.
- The other side
- The 10-K lists both the demand failing to materialize and regulators not approving rate adjustments as risks, and FY2025 EPS includes a $480M one-time FERC benefit.
Evidence: SEC EDGAR XBRL; Form 10-K (FY2025)
2. Rising dividend
Dividends declared per share rose every year from $3.00 to $3.74 over FY2021–FY2025.
- What has to hold
- Earnings keep growing.
- The other side
- The dividend is paid while free cash flow is negative, so the growth plan relies on outside financing, including new shares.
Evidence: SEC EDGAR XBRL
3. Low market sensitivity
AEP's beta against the S&P 500 is close to zero (−0.08 over 2.5 years of weekly data).
- What has to hold
- Utility shares stay defensive.
- The other side
- R² of 0.00 means the market explains almost none of the price movement, so the beta isn't a reliable measure, and it doesn't capture regulatory or financing risk.
Evidence: This site's beta calculation
Dividend yield, payout ratio, and P/E above use the fiscal year-end share price. FCF yield is negative because capital spending exceeds operating cash flow.
18
Resilience
How well the company could absorb a bad year: its financial buffer, how its revenue and profit held up in the worst year on record, and what the 10-K says about the business's exposure to shocks. Figures and filing statements only — no overall rating.
1. Financial buffer (FY2025)
Cash & short-term investments ÷ debt due within a year
0.1x
$417M vs. $5.31B
Interest coverage (operating income ÷ interest expense)
2.6x
$5.32B vs. $2.03B
Free cash flow ÷ dividends paid
-0.8x
−$1.51B vs. $2.01B (FCF = operating CF − capex)
2. Worst year in the record, and the recovery
| Figure | Worst year-over-year change | Back to the prior level? |
|---|---|---|
| Revenue | -3.3% in FY2023 ($19.64B → $18.98B) | Yes, by FY2024 |
| Operating income | No decline in the record | — |
Covers only the 5 fiscal years on record (FY2021–FY2025), which may not include a full recession — the worst year here isn’t necessarily how the company would fare in a severe downturn.
3. Business resilience (from the 10-K)
Liquidity
Net available liquidity of $5.6B at FY2025 year-end, backed by $6B of revolving credit facilities; management believes liquidity is adequate for the next twelve months and the foreseeable future.
Source: Form 10-K (FY2025), MD&A Liquidity
Fuel cost pass-through
Coal and natural gas costs are typically recovered through fuel reconciliation mechanisms, which limits the earnings impact of fuel price swings.
Source: Form 10-K (FY2025), Item 1 · See Contract structure
Dependence on capital markets
With capital spending above operating cash flow, AEP depends on debt and equity markets; the 10-K warns that an inability to secure financing could delay required facilities.
Source: Form 10-K (FY2025), Item 1A
Weather sensitivity
AEP has historically sold less power and earned less income when weather is milder.
Source: Form 10-K (FY2025), Item 1
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Risks (including geopolitical)
Starting from the 10-K's Risk Factors section, organized by category — geopolitical, currency, raw materials, regulatory, disaster, and more — with impact and likelihood assessed by this site.
Risk map
Vertical = impact on results, horizontal = likelihood. Upper right = most severe. Numbers match the list below (placement is this site’s own assessment).
Likelihood →
"Company disclosure" vs. "this site’s assessment"
The description and mitigation for each risk are this site’s summary of the 10-K’s "Risk Factors" section. Impact and likelihood are this site’s own assessment, not the company’s — where the company discloses its own likelihood assessment, that is noted in the summary.
Impact is judged from how large the affected business is relative to total revenue/profit, and from the risk’s track record of moving results in the past. Likelihood is judged from the filing’s wording and the current business environment (already occurring, or recurring).
- 1Law & regulation
Cost recovery for the capital plan
- Company disclosure (summarized from the 10-K)
- If regulators don't approve rate adjustments, AEP's subsidiaries couldn't recover their investments; the 10-K says rising spending could trigger more regulatory scrutiny of cost recovery.
- Company’s stated mitigation
- Formula rates, riders, and settlements in several jurisdictions.
- This site’s assessment
- Impact High / Likelihood Med
- 2Demand & macro
Data center demand not materializing
- Company disclosure (summarized from the 10-K)
- The capital plan depends in part on data centers and large-load customers connecting to the system; the 10-K says results could be affected if that demand doesn't occur or isn't sustained as projected.
- Company’s stated mitigation
- Large-load tariffs with long contracts, take-or-pay minimums, and deposits.
- This site’s assessment
- Impact High / Likelihood Med
- 3FX & interest rates
Financing needs and interest rates
- Company disclosure (summarized from the 10-K)
- The 10-K says the projects may require capital beyond historical utility financing needs and that higher interest rates on commercial paper and other variable-rate debt could reduce income.
- Company’s stated mitigation
- $6B of revolving credit facilities, a $3.5B ATM equity program, and about $1.7B expected from a 2025 equity forward sale.
- This site’s assessment
- Impact Med / Likelihood Med
- 4Supply chain
Project execution
- Company disclosure (summarized from the 10-K)
- Construction risks include delays, supply chain disruption, cost overruns, inflation, and labor shortages, and canceled projects could leave unrecoverable costs.
- Company’s stated mitigation
- Not stated beyond general risk measures.
- This site’s assessment
- Impact Med / Likelihood Med
- 5Law & regulation
PJM capacity market reform
- Company disclosure (summarized from the 10-K)
- Reforms initiated after a January 2026 statement by the White House and PJM-state governors could materially affect AEP's competitive retail operations and AEP Ohio's cost allocations; management says it can't predict the impact.
- Company’s stated mitigation
- Engagement with regulators and policymakers.
- This site’s assessment
- Impact Med / Likelihood Med
- 6Disaster
Weather
- Company disclosure (summarized from the 10-K)
- AEP has historically sold less power and earned less in mild weather; favorable weather helped 2025 sales.
- Company’s stated mitigation
- Not stated in the 10-K.
- This site’s assessment
- Impact Med / Likelihood High
20
What to watch going forward
- Whether large-load customers, including the 36 GW of letters of agreement at AEP Texas, actually connect.
- Rate case outcomes and approval of large-load tariffs still pending in four jurisdictions.
- Execution and funding of the $72B five-year capital plan, including new share issuance.
- PJM capacity market reform and its effect on AEP Ohio and competitive retail.
- Interest costs as debt grows.
21
Source documents
This page's financial figures come from the Form 10-Ks listed below. Check the original filings for full detail.
Last updated
Analysis last edited: October 4, 2026 · Financial data fetched: October 3, 2026 15:29 (SEC EDGAR) · Source 10-K filed: February 12, 2026
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
This page is this site’s own analysis based on public information, and does not represent American Electric Power Company, Inc.’s views. It is not a recommendation to buy or sell any security, and this site does not guarantee the accuracy of any figure or statement here. Always verify against the original source documents before making an investment decision.