NEW YORK (TheStreet) -- American Electric Power (AEP - Get Report) shares are retreating -1.8% to $51.36 on Monday after being downgraded to "equal weight" from "overweight" by analysts at Morgan Stanley (MS - Get Report), who set a $52 price target based on valuation.
TheStreet Ratings team rates AMERICAN ELECTRIC POWER CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN ELECTRIC POWER CO (AEP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AEP's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 12.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- AMERICAN ELECTRIC POWER CO has improved earnings per share by 15.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, AMERICAN ELECTRIC POWER CO increased its bottom line by earning $3.04 versus $2.60 in the prior year. This year, the market expects an improvement in earnings ($3.50 versus $3.04).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electric Utilities industry average. The net income increased by 15.4% when compared to the same quarter one year prior, going from $338.00 million to $390.00 million.
- Net operating cash flow has increased to $1,064.00 million or 40.00% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.84%.
- You can view the full analysis from the report here: AEP Ratings Report