Key Stats for American Electric Power Stock
- This-Week Performance: 8%
- 52-Week Range: $97 to $133
- Valuation Model Target Price: $150
- Implied Upside: 16%
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What Happened?
American Electric Power stock rose about 8% this week, finishing near $130 per share as investors reacted to stronger-than-expected fourth-quarter results, reaffirmed 2026 guidance, and a sharp increase in contracted load growth tied to data center demand.
The stock moved higher after AEP delivered an earnings beat and expanded visibility into future growth during its Feb. 12 earnings call.
The company reported Q4 operating EPS of $1.19 and full-year 2025 operating EPS of $5.97, exceeding the top end of its $5.75 to $5.95 guidance range.
Management reaffirmed 2026 EPS guidance of $6.15 to $6.45 and doubled firm incremental contracted load additions to 56 gigawatts backed by signed customer agreements.
CEO Bill Fehrman highlighted the momentum, stating the company finished 2025 with strong performance and “we are only just getting started.”
The 56 gigawatt update was particularly significant because the incremental demand is backed by signed financial agreements, strengthening confidence that AEP’s $72 billion five-year capital plan targeting a 10% rate base CAGR can translate into durable regulated earnings growth.
Analyst and institutional activity also supported sentiment. Mizuho raised its price target to $130 from $123 while maintaining a neutral rating.
Vanguard trimmed its stake by 1.5% in Q3, selling 799,472 shares but still holding 51,668,307 shares valued at about $5.81 billion, representing 9.65% of the company.
NEOS Investment Management increased its position by 57.4%, while Metis Global Partners raised its stake by 17% and Wealthfront Advisers increased holdings by 8.4%. Illinois Municipal Retirement Fund boosted its position by 18.3%.
Meanwhile, Zions Bancorporation cut its stake by 21.2%, GF Fund Management reduced its holdings by 28.9%, CIBC World Market trimmed 61.8%, ProShare Advisors cut 18.6%, and Rhumbline Advisers reduced its stake by 2.7%.
Overall institutional ownership remains around 75%, reflecting continued large investor participation.
AEP closed near its 52-week high of $133, reinforcing confidence in the company’s ability to convert accelerating large-load demand into steady 2026 earnings growth.
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Is American Electric Power Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 7.5%
- Operating Margins: 27.7%
- Exit P/E Multiple: 18x
Revenue is projected to rise from about $23 billion in 2026 to roughly $32 billion by 2030 based on analyst estimates shown in the TIKR model.
That trajectory reflects continued transmission expansion, grid modernization, and large-load demand growth across Texas, Ohio, Indiana, and Oklahoma.
The company’s $72 billion five-year capital plan targets a 10% rate base CAGR, which directly supports earnings growth in a regulated utility framework where expanding rate base translates into higher allowed returns.
AEP’s ownership of nearly 90% of the 765 kV transmission network in the United States strengthens its competitive position for additional transmission awards and incremental capital deployment opportunities.
Execution in 2026 will depend on regulatory approvals, conversion of the 56 gigawatts of contracted load into infrastructure investment, and disciplined capital allocation.
Transmission awards, tariff approvals, and large-load interconnections remain key drivers of earnings delivery this year.
Based on these inputs, the model estimates a target price of $150, implying about 16% total upside over roughly 3 years, or approximately 5% annualized returns from current levels near $130.
At current levels, AEP appears modestly undervalued relative to its regulated growth profile, with forward performance driven by steady rate base expansion, transmission scale advantages, and continued infrastructure buildouts rather than cyclical demand swings.
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