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Why Is AEP (AEP) Up 11.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for American Electric Power (AEP - Free Report) . Shares have added about 11.4% in that time frame, outperforming the S&P 500.

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

American Electric Q4 Earnings Top, Revenues Flat Y/Y

American Electric Corp.’s fourth-quarter 2020 adjusted earnings of 87 cents per share from continuing operations beat the Zacks Consensus Estimate of 79 cents by 10.1%. The bottom line improved 45% from the year-ago quarter’s adjusted earnings figure.

The company posted GAAP earnings of 88 cents per share in the reported quarter, up from 31 cents generated in the fourth quarter of 2019.

For 2020, the company reported earnings of $4.44 per share, up from $3.89 reported for 2019. The full-year bottom-line figure surpassed the Zacks Consensus Estimate of $4.34.

Total Revenues

Total revenues came in at $3.6 billion in the reported quarter, which remained flat year over year. The top line however lagged the Zacks Consensus Estimate of $3.9 billion by 8.3%.

For 2020, the company recorded revenues of $14.9 billion, lower than $15.6 billion generated in 2019. The full-year revenues also lagged the Zacks Consensus Estimate of $15.1 billion.

American Electric’s total electricity sales volume dropped 2.1% to 18,138 million kilowatt hours (kWh) from 18,527 million kWh in the year-ago quarter.

Total operating expenses were $2,032.5 million, down 0.3% year over year. Interest expenses were $288.3 million compared with $289.7 million a year ago.

The company’s operating income improved 19.2% to $562 million from $471.4 million in the year-ago quarter.

Segment Results

Vertically Integrated Utilities unit reported operating earnings of $155.1 million for the fourth quarter compared with $136.5 million in the year-ago quarter.

Transmission & Distribution Utilities unit reported operating income of $93.8 million compared with $71 million in the year-ago quarter.

AEP Transmission Holdco unit reported operating income of $134.6 million compared with $115 million in the year-ago quarter.

Generation & Marketing unit reported operating income of $24.2 million in the fourth quarter compared with $0.1 million in the year-ago quarter.

Financial Condition

The company reported cash and cash equivalents of $392.7 million as of Dec 31, 2020, compared with $246.8 million at 2019-end.

As of Dec 31, 2020, long-term debt totaled $28,986 million compared with $25,126 million as of Dec 31, 2019.

At the end of 2020, cash from operating activities amounted to $3,832.9 million compared with $4,270.1 million at the 2019 end.

Guidance

American Electric currently expects earnings in the range of $4.55-4.75 per share for 2021. Currently, the Zacks Consensus Estimate for the company’s 2021 earnings is pegged at $4.65 per share, in line with the midpoint of its guided range.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, AEP has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, AEP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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