It has been about a month since the last earnings report for American Electric Power (AEP Quick QuoteAEP - Free Report) . Shares have lost about 10.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AEP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

American Electric Q3 Earnings Beat, Revenues Fall Y/Y

American Electric Power reported third-quarter 2020 adjusted earnings per share of $1.47, which beat the Zacks Consensus Estimate of $1.46 by 0.7%. The bottom line also improved 0.7% from the year-ago quarter’s reported figure.

The company reported GAAP earnings of $1.51 per share compared with the year-ago quarter’s earnings of $1.49.

Total Revenues

American Electric’s third-quarter revenues of $4.1 billion missed the Zacks Consensus Estimate of $4.5 billion by 8.3%. The reported figure also declined 4.7% from the year-ago quarter’s $4.3 billion.

Quarterly Highlights

Total adjusted expenses in the quarter were $1,875 million compared with $1,941.7 million a year ago.

Adjusted operating income was $728.2 million, up 0.8% from $722.3 million in the year-ago quarter.

Segmental Performance

Vertically Integrated Utility Operations: Operating earnings in the quarter decreased to $422.5 million from $437.9 million in the year-ago quarter.

Transmission & Distribution Utilities: Operating earnings were $152.6 million, up from $133.9 million in the year-ago quarter.

AEP Transmission Holdco: This segment generated operating earnings of $139.6 million, up from $126.1 million in the second quarter of 2019.

Generation and Marketing: Operating earnings were $63.2 million, down from $78.3 million in the year-ago quarter.

Corporate & Other: Operating losses were $49.7 million compared with operating loss of $53.9 million in the year-ago quarter.

Financial Update

As of Sep 30, 2020, American Electric had cash and cash equivalents of $409.7 million compared with $246.8 million as of Dec 31, 2019.

Long-term debt was $28.16 billion as of Sep 30, 2020, compared with $25.13 billion as of Dec 31, 2019.

Cash flow from operations was $2,922.2 million at the end of third-quarter 2020 compared with $3,349.9 million at the end of second-quarter 2019.

2020 Guidance

American Electric reaffirmed 2020 operating earnings guidance in the range of $4.25-$4.45 per share. The Zacks Consensus Estimate for 2020 earnings, pegged at $4.32, lies below the mid-point of the guidance.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -5.41% due to these changes.

VGM Scores

At this time, AEP has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, AEP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.