Value
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.1 |
| P/S | 8.3 |
| EV/EBITDA | 3.9 |
| Fwd P/E | 6.7 |
| PEG | 3.8 |
| Analyst target | 4.0 |
- ▸Forward P/E: 18.9x
- ▸PEG: 2.82
AEP · Why this verdict
Why American Electric Power (AEP) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
American Electric Power is a leveraged regulated utility with positive momentum and a growing top line, but at $130.21 the price is 1.8% above the $127.86 analyst target, with a 18.9x forward P/E, D/E of 1.6 and negative free cash flow.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The price of $130.21 is above the $127.86 analyst target (upside of -1.8%), with downside of 8.9% and a reward-to-risk of -0.2. Analyst target | Analyst targets should rise above $130 or price should consolidate toward the target. | →Stable |
| CounterRegulated utilities with growing rate bases often keep rising above analyst targets as targets are revised upward. | ||
Momentum score is 7.9, with rising on-balance volume, price above its 200-day moving average and institutions accumulating. Momentum breakdown | Price should hold above its 200-day moving average with momentum score at or above 5.5. | ↑Improving |
| CounterWith price already above analyst targets and RSI 64, momentum could reverse if rates rise. | ||
Debt-to-equity of 1.6 triggers a 1.0 leverage penalty and free cash flow is -232% of net income, an earnings-quality red flag. Quality breakdown | Debt-to-equity should stay below 1.8 while capital spending is recovered through rates. | ↑Improving |
| CounterNegative free cash flow in regulated utilities reflects heavy capital spending that earns a regulated return, and a Piotroski F-Score of 7/9 supports financial health. | ||
Forward P/E of 18.9x and PEG of 2.82 imply growth is fully priced, with value score 5.3. Valuation breakdown | Forward P/E should stay below 20x as earnings grow. | →Stable |
| CounterPremium utility multiples can persist when investors seek defensive earnings with data-center-driven load growth. | ||
AEP beat estimates in 3 of the last 4 quarters (average surprise +2.3%) and quarterly revenue reached $6.83B in September 2026 versus $5.96B a year earlier. Earnings | Quarterly revenue should reach the $5.24B estimate for the next period and EPS should beat. | ↑Improving |
| CounterOne miss in four quarters and small average beats show limited earnings upside, and revenue data has a 5.2% source divergence. | ||
The price of $130.21 is above the $127.86 analyst target (upside of -1.8%), with downside of 8.9% and a reward-to-risk of -0.2.
→StableAnalyst target
- Expectation
- Analyst targets should rise above $130 or price should consolidate toward the target.
CounterRegulated utilities with growing rate bases often keep rising above analyst targets as targets are revised upward.
Momentum score is 7.9, with rising on-balance volume, price above its 200-day moving average and institutions accumulating.
↑ImprovingMomentum breakdown
- Expectation
- Price should hold above its 200-day moving average with momentum score at or above 5.5.
CounterWith price already above analyst targets and RSI 64, momentum could reverse if rates rise.
Debt-to-equity of 1.6 triggers a 1.0 leverage penalty and free cash flow is -232% of net income, an earnings-quality red flag.
↑ImprovingQuality breakdown
- Expectation
- Debt-to-equity should stay below 1.8 while capital spending is recovered through rates.
CounterNegative free cash flow in regulated utilities reflects heavy capital spending that earns a regulated return, and a Piotroski F-Score of 7/9 supports financial health.
Forward P/E of 18.9x and PEG of 2.82 imply growth is fully priced, with value score 5.3.
→StableValuation breakdown
- Expectation
- Forward P/E should stay below 20x as earnings grow.
CounterPremium utility multiples can persist when investors seek defensive earnings with data-center-driven load growth.
AEP beat estimates in 3 of the last 4 quarters (average surprise +2.3%) and quarterly revenue reached $6.83B in September 2026 versus $5.96B a year earlier.
↑ImprovingEarnings
- Expectation
- Quarterly revenue should reach the $5.24B estimate for the next period and EPS should beat.
CounterOne miss in four quarters and small average beats show limited earnings upside, and revenue data has a 5.2% source divergence.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.5 |
| ROA | 2.0 |
| Gross margin | 5.3 |
| Op margin | 10.0 |
| Net margin | 7.1 |
| Current ratio | 2.1 |
| FCF quality | 0.0 |
| Moat | 5.6 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -232% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.9 |
| EPS growth | 5.9 |
Momentum
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.9 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.8 |
| Analyst rating | 7.5 |
| Price target | 6.4 |
- ▸LLM news sentiment: +0.36 (n=5)
Insider
6.7/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 8.1 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $250,000 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.6 |
| quality rank | 5.5 |
| growth rank | 8.5 |
- ▸Industry growth leader
Technical
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.6 |
| support resistance | 2.1 |
| 52w position | 8.6 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.5 |
| days to cover | 3.7 |
| volatility | 7.5 |
| put call | 5.1 |
| implied vol | 6.4 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 3.8 |
| news risk | 6.0 |
- ▸Above max pain $105
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 7.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.7 |
| dividend safety | 3.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (7)
- MOMENTUM:7.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.60
- EARNINGS_PROXIMITY:100d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.2=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.16
Upside
-1.1%
Downside
6.7%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 59, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.16 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.5, Sentiment at 6.9, and Insider at 6.7; the weakest are Technical at 4.4, Quality at 4.8, and Peer rank at 5.3. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.16 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Price Above Analyst Target
Trip ifPrice exceeds 15% above the $127.86 analyst target, above about $147.
- P2Rising Momentum And Accumulation
Trip ifMomentum score falls below 5.0 from current 7.9.
- P3Leverage And Weak Cash Conversion
Trip ifDebt-to-equity exceeds 2.0 from current 1.6.
- P4Full Utility Valuation
Trip ifForward P/E rises above 22x from current 18.9x.
- P5Earnings Record And Revenue
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.