Yahoo Finance American Electric Gains From Steady Capital Expenditure
American Electric Power Company, Inc.’s AEP ongoing investments in transmission projects and expanding renewable portfolio bode well for its earnings in the future.
For 2019, earnings estimates inched up 0.2% to $4.18 per share in the past 30 days. Additionally, long-term earnings growth of the company is pegged at 5.6%. The company posted an average positive earnings surprise of 5% in the last four quarters.
In the past 12 months, shares of the company have returned 20.9% compared with the industry’s growth of 10.7%.
What’s Driving the Stock?
The company had a strong liquidity position of $2.6 billion as of Sep 30, supported by its revolving credit facility. This enables the company to finance its upcoming initiatives. Courtesy of a solid financial position, the company is able to reward shareholders via dividend payouts.
American Electric has a stable earnings base of approximately 5.4 million customers spread across 11 states. This provides stability to the company’s revenue stream and insulates it from lower sales in any particular service area.
To drive earnings, American Electric plans to invest approximately $33 billion over the 2019-2023 period in its core regulated operations, contracted renewables and wires. This indicates 37.5% increase from the previous capital expenditure strategy, which will enable American Electric to achieve long-term organic growth of 5-7%.
The company’s investment strategy also includes notable investments in renewable generation projects across the United States. Evidently, its latest plan includes capital expenditure of $2.2 billion in contracted renewables over the 2019-2023 period, of which $1.5 billion has already been spent.
However, stringent environmental regulations and dependence on regulatory commissions for rate relief at regular intervals are major headwinds.
Zacks Rank
American Electric carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks from the same industry are Eversource Energy ES, FirstEnergy Corporation FE and Fortis Inc FTS. All the three stocks hold a Zacks Rank #2 (Buy).
Long-term earnings growth of Eversource, FirstEnergy and Fortis is pegged at 5.6%, 6% and 5.7%, respectively.
Eversource, FirstEnergy and Fortis delivered an average positive earnings surprise of 2.39%, 2.87% and 4.14% in the last four quarters, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
FirstEnergy Corporation (FE) : Free Stock Analysis Report
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
Fortis Inc. (FTS) : Free Stock Analysis Report
Eversource Energy (ES) : Free Stock Analysis Report
To read this article on Zacks.com click here.
