AEP signed a clean energy contract with Crown Battery Manufacturing
On April 19, utility concerns American Electric Power Company, Inc. (NASDAQ: AEP) signed an agreement with Crown Battery Manufacturing Company to provide clean energy through an integrated renewable energy solution. AEP Energy will provide the company with clean energy through a long-term, fixed-price retail energy option that supports new, locally-produced wind and solar energy. The deal will last more than 12 years from January 2023.
American Electric Power is expected to release quarterly results on Thursday April 22nd. In recent history, AEP has exceeded earnings expectations in two of the last four earnings reports published. However, the stock’s post-earnings reactions were quite subdued. Over the past eight quarters, the average movement has been 1.6%, regardless of direction.
On the charts, the AEP rose 6.5% in 2021, rebounding from the $ 75 level it exceeded in February. Last traded at $ 89.32, the recent positive price move pushed the 14-day index for relative strength (RSI) to 73, firmly in the overbought territory. American Electric Power also offers a forward dividend of $ 2.96, which translates to a dividend yield of 3.34%.
Basically, American Electric Power has some major shortcomings. Starting from the largest issue, AEP has amassed massive debts of $ 34.72 billion, which is particularly worrying when compared to all of the cash available. American Electric Power has only $ 593.5 million in cash on its balance sheet. In addition, sales have declined since 2018, despite a 15% increase in net income in 2020. In 2020, AEP sales declined more than 4% and declined 8% in the last 2 years. American Electric Power stock has also reached a high valuation and is now trading at a price-to-earnings-ratio of 20.06. Even at a price / earnings ratio of 18.90, AEP is too risky to justify its current value to potential investors.