- Price
- $127.14
- Fair value
- $136.00
- Discount
- 6.5%
- Uncertainty
- Low
- LSEG rating
- 2.25
- Moat
- Narrow
- Next earnings
- 2026-10-30
- Next earnings is estimate
- Yes
- Company name
- American Electric Power
- Sector
- Electric utility
- About
- American Electric Power (AEP) is one of the largest regulated electric utilities in the United States. Its companies, such as AEP Ohio, AEP Texas and Appalachian Power, deliver power to 5.6 million customers in 11 states. AEP operates the largest electric transmission system in the country, with 40,000 line miles, and more than 252,000 miles of distribution lines. It owns or contracts about 33,000 megawatts of generating capacity. State and federal regulators set its rates, so earnings grow mostly with the investment on which its utilities may earn a return. AEP plans to invest $78 billion from 2026 through 2030. Data centers, hyperscalers and industrial customers signed agreements for 69 gigawatts of new load through 2030.
- Thesis
- The market prices AEP for the cost and risk of a very large building plan. AEP plans to invest $78 billion from 2026 through 2030 and sees more than $10 billion of further projects. To pay for this, it issues new debt and new shares: in May 2026, it agreed to sell about 23.5 million new shares through forward sale agreements at an initial price of $124.968 per share. Total debt rose to $52.8 billion at June 30, 2026, from $48.8 billion at December 31, 2025. Regulators and customers also watch power bills closely, and growth depends on data center customers that must take the power as planned. Q2 2026 operating EPS fell to $1.36 from $1.43, partly because of the 2025 sale of a minority interest in transmission. For the gap to close, three things must be true. AEP must earn 2026 operating EPS within its raised guidance of $6.25 to $6.55. The new large load customers must come online under their take-or-pay agreements, so that operating EPS grows 7% to 9% a year through 2030. State regulators must keep approving large load tariffs and new generation. The Q3 2026 report, estimated for about October 30, 2026, is the next test. The 2027 guidance in early 2027 is the main test. If these checks pass, the gap can close over the next two to four quarters. The main reason it may not close is a delay in data center demand, which would leave AEP with costly new plants and lines.
- Risks
- Growth depends on large new customers, mostly data centers and hyperscalers, with 69 gigawatts of signed load through 2030. If these customers delay or cancel projects, AEP may build plants and lines that it does not need, although take-or-pay agreements give some protection.
The $78 billion investment plan needs large amounts of new debt and new shares. Total debt rose to $52.8 billion at June 30, 2026, and AEP agreed to sell about 23.5 million new shares in May 2026. Higher interest rates or a lower share price make this funding more costly.
Regulators in 11 states set AEP's rates. Higher power bills can cause regulators to approve lower returns or smaller rate increases. In Q2 2026, Ohio approved a distribution base rate decrease for customers.
AEP plans new gas, fuel cell and possibly nuclear generation. Large projects can cost more or take longer than planned, and AEP's head of nuclear development left the company in September 2026.
- Balance sheet
- Cash: $375M
Debt: $52.8B
Net debt: $52.5B
Interest cover: 2.3×
Debt due within 12 months: $4.8B
AEP funds its utilities with long-term bonds, securitization bonds, commercial paper and new shares. At June 30, 2026, total debt was $52.84 billion: long-term debt of $50.81 billion, including $2.82 billion due within one year, and short-term debt of $2.03 billion. The amount due within 12 months includes the long-term debt due within one year and the short-term debt. Debt was 61.4% of total capitalization. Cash was $375 million. AEP had revolving credit facilities of $6.5 billion until April 2031 and $1.5 billion until April 2029, and $1.13 billion of commercial paper was outstanding. Interest cover is operating income divided by interest expense for the first half of 2026. AEP also uses DOE loans of about $5 billion in total for projects that lower customer costs. The forward sale of about 23.5 million shares can bring about $2.9 billion of new equity when AEP settles it.
As of 2026-06-30.
- Checkpoints
- Oct 30, 2026 (estimate): Q3 2026 earnings: guidance and new load. Pending. Watch: Year-to-date operating EPS on track for the $6.25 to $6.55 guidance and signed new load at 69 gigawatts or more pass; a cut to the guidance or lost load agreements fail.
Feb 2027 (estimate): Full-year 2026 results and 2027 guidance. Pending. Watch: 2027 operating EPS guidance about 7% to 9% above the 2026 result, with the capital plan funded as planned, passes; guidance below 7% growth or a large new share sale fails.
- Recent events
- 2026-09-29: Alicia Knapp, President Nuclear Development of AEP, left the company in an involuntary separation.
2026-07-30: AEP reported Q2 2026 results. GAAP EPS was $1.31 and operating EPS was $1.36, down from $1.43, because of the 2025 transmission minority interest sale and the timing of tax items. AEP raised its 2026 operating EPS guidance to $6.25 to $6.55. Signed new load grew by 6 gigawatts to 69 gigawatts through 2030, and AEP secured about 13 gigawatts of gas turbine capacity. AEP Texas secured a DOE loan of up to $3.3 billion for transmission projects.
2026-07-20: The board elected David S. Marriott, Chairman of Marriott International, and Charles J. Meyers, Executive Chairman of Equinix, as directors.
2026-05-13: AEP agreed to sell 23,543,308 new shares through forward sale agreements with three banks, including the underwriters' option of 3,070,866 shares. The initial forward price is $124.968 per share, and AEP expects to settle on or before May 31, 2028.
2026-01-04: An unregulated AEP company agreed to buy solid oxide fuel cells for about $2.65 billion for a power plant near Cheyenne, Wyoming. A high investment grade customer agreed to buy all of its output for 20 years, subject to conditions.