AEP
American Electric Power Company, Inc.
$131.59
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 13.8% above fair value
You pay
$131.59
Bear
$101.14
Fair
$115.59
Bull
$130.04
Bear
$101.14
-23.1%
$6.66 × 14x P/E
Fair
$115.59
-12.2%
$6.66 × 16x P/E
Bull
$130.04
-1.2%
$6.66 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
19.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $136.67 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $115.59 per share.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples