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American Electric Power Co has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.
Warning Sign:
American Electric Power Co Inc displays poor financial strength. Usually, this is caused by too much debt for the company.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:
1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.American Electric Power Co's Interest Coverage for the quarter that ended in Jun. 2024 was 1.77. American Electric Power Co's debt to revenue ratio for the quarter that ended in Jun. 2024 was 2.42. As of today, American Electric Power Co's Altman Z-Score is 0.90.
For the Utilities - Regulated Electric subindustry, American Electric Power Co's Financial Strength, along with its competitors' market caps and Financial Strength data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
For the Utilities - Regulated industry and Utilities sector, American Electric Power Co's Financial Strength distribution charts can be found below:
* The bar in red indicates where American Electric Power Co's Financial Strength falls into.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors
A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.
1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.
Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:
American Electric Power Co's Interest Expense for the months ended in Jun. 2024 was $-466 Mil. Its Operating Income for the months ended in Jun. 2024 was $826 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2024 was $40,487 Mil.
American Electric Power Co's Interest Coverage for the quarter that ended in Jun. 2024 is
Interest Coverage | = | -1 | * | Operating Income (Q: Jun. 2024 ) | / | Interest Expense (Q: Jun. 2024 ) |
= | -1 | * | 826.4 | / | -465.6 | |
= | 1.77 |
The higher the ratio, the stronger the company's financial strength is.
Warning Sign:
Ben Graham prefers companies' interest coverage to be at least 5. American Electric Power Co Inc interest coverage is 2.21, which is low.
2. Debt to revenue ratio. The lower, the better.
American Electric Power Co's Debt to Revenue Ratio for the quarter that ended in Jun. 2024 is
Debt to Revenue Ratio | = | Total Debt (Q: Jun. 2024 ) | / | Revenue | ||
= | (Short-Term Debt & Capital Lease Obligation | + | Long-Term Debt & Capital Lease Obligation) | / | Revenue | |
= | (3852.7 | + | 40487.3) | / | 18316.8 | |
= | 2.42 |
3. Altman Z-Score.
Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.
The zones of discrimination were as such:
When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.
American Electric Power Co has a Z-score of 0.90, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.
Warning Sign:
Altman Z-score of 0.9 is in distress zone. This implies bankruptcy possibility in the next two years.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
American Electric Power Co (NAS:AEP) Financial Strength Explanation
The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.
American Electric Power Co has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.
Thank you for viewing the detailed overview of American Electric Power Co's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.
Antonio P Smyth | officer: Executive Vice President | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Greg B Hall | officer: Executive Vice President | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Daniel G. Stoddard | director | 5000 DOMINION BOULEVARD, GLEN ALLEN VA 23060 |
Kate Sturgess | officer: Controller, CAO | 2244 WALNUT GROVE AVENUE, ROSEMEAD CA 91770 |
David Matthew Feinberg | officer: Senior Vice President | C/O ALLEGHENY ENERGY, INC., 800 CABIN HILL DRIVE, GREENSBURG PA 15601 |
Christian T Beam | officer: Executive Vice President | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Nicholas K Akins | officer: Executive Vice President | AMERICAN ELECTRIC POWER COMPANY, INC., 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Ann P Kelly | officer: Executive Vice President & CFO | 460 NORTH GULPH ROAD, KING OF PRUSSIA PA 19406 |
Peggy Simmons | officer: Executive Vice President | 212 E 6TH ST, TULSA OK 74119 |
Raja Sundararajan | officer: Executive Vice President | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Donna James | director | ONE MIRANOVA PLACE, SUITE 1040, COLUMBUS OH 43215 |
Therace Risch | officer: Senior Vice President | 6501 LEGACY DRIVE, PLANO TX 75024 |
Charles E Zebula | officer: Executive Vice President | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Paul Iii Chodak | officer: Executive Vice President | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
Julia A Sloat | officer: Executive VP, CFO | 1 RIVERSIDE PLAZA, COLUMBUS OH 43215 |
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