AEP Stock Rides on Investments & Renewable Portfolio Expansion

American Electric Power Company, Inc. AEP is deploying systematic investments in infrastructural upgrades to enhance the reliability of its operations and serve its utility customers efficiently. The company is also making consistent investments to boost its renewable generation portfolio.However, this Zacks Rank #2 (Buy) company faces risks related to a weak solvency position.AEP’s Tailwinds American Electric has a capital investment plan of $43 billion for the 2024-2028 period in its core regulated operations, contracted renewables and wires. This should boost AEP’s customer reliability. The company expects this systematic investment to support it in achieving long-term earnings growth of 6-7%.Moreover, American Electric intends to invest roughly $27.3 billion in its transmission and distribution operations between 2024 and 2028 to build a more efficient grid and provide consumers with customized energy solutions.In the clean energy space, as of June 30, 2024, AEP has regulatory nods from several state regulatory commissions to purchase 2,811 megawatts of owned renewable generation facilities for a total estimated cost of $6.6 billion. It plans to invest $9.4 billion in controlled renewable expansion between 2024 and 2028. This should boost its renewable generation portfolio in the years to come.Headwinds Faced by AEP As of June 30, 2024, American Electric Power owned 23,200 MW of generating capacity, with 10,700 MW being coal-fired. The company is evaluating the impacts of four new Environmental Protection Agency ("EPA") rules on its generating fleet, which could materially impact its operating results as it refines cost estimates for complying with these rules while meeting its obligations to provide reliable and affordable electricity.As of June 30, 2024, American Electric had $40 billion in long-term debt, while its cash equivalents totaled $0.47 billion. As of the same date, its current debt was $3.75 billion. As both AEP’s current and long-term debt levels remained far greater than its cash reserve, the company seems to have a weak position concerning its solvency.AEP Stock Price Movement In the past six months, shares of AEP have risen 16.1% compared with the industry’s growth of 14.6%.Image Source: Zacks Investment ResearchStocks to Consider Some better-ranked stocks from the same industry are DTE Energy Company DTE, Duke Energy DUK and NiSource Inc. NI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.DTE Energy’s long-term (three to five years) earnings growth rate is 8.1%. The company delivered an average earnings surprise of 0.77% in the last four quarters.Duke Energy delivered an average earnings surprise of 4.88% in the last four quarters. The Zacks Consensus Estimate for DUK’s 2024 sales suggests an improvement of 4.7% from the prior-year reported figure.NiSource’s long-term earnings growth rate is 7%. The company delivered an average earnings surprise of 20.64% in the last four quarters.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NiSource, Inc (NI): Free Stock Analysis Report Duke Energy Corporation (DUK): Free Stock Analysis Report DTE Energy Company (DTE): Free Stock Analysis Report American Electric Power Company, Inc. (AEP): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks