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American Electric Power (AEP) Gains But Lags Market: What You Should Know

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American Electric Power (AEP - Free Report) closed at $90.10 in the latest trading session, marking a +1.32% move from the prior day. This move lagged the S&P 500's daily gain of 1.42%. Elsewhere, the Dow gained 1%, while the tech-heavy Nasdaq added 5.16%.

Coming into today, shares of the utility had gained 1.09% in the past month. In that same time, the Utilities sector gained 2.18%, while the S&P 500 gained 0.27%.

Wall Street will be looking for positivity from American Electric Power as it approaches its next earnings report date. On that day, American Electric Power is projected to report earnings of $1.27 per share, which would represent year-over-year growth of 4.1%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.73 billion, up 2.9% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.32 per share and revenue of $19.52 billion, which would represent changes of +4.52% and -0.43%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for American Electric Power. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.38% lower. American Electric Power is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note American Electric Power's current valuation metrics, including its Forward P/E ratio of 16.7. For comparison, its industry has an average Forward P/E of 16.95, which means American Electric Power is trading at a discount to the group.

It is also worth noting that AEP currently has a PEG ratio of 2.75. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Utility - Electric Power stocks are, on average, holding a PEG ratio of 2.85 based on yesterday's closing prices.

The Utility - Electric Power industry is part of the Utilities sector. This group has a Zacks Industry Rank of 156, putting it in the bottom 39% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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