American Electric Power Hits 52-Week High On Investments

Share price of Columbus, OH-based electric and power company, American Electric Power Company, Inc. (NYSE:AEP) , hit a new 52-week high of $72.22 on Jun 1, finally closing a tad lower at $71.40. The stock has delivered a one-year return of about 15.7% compared with the Zacks categorized Utility - Electric Power industry’s gain of 7.5%.

In the past 52 weeks, American Electric‘s share price has ranged from a low of $57.89 to a high of $72.22. Average volume of shares traded in the last three months is approximately 2.3 million.

Factors behind the Performance

As per its most recent Corporate Accountability Report, unveiled last week, American Electric Power has planned to invest approximately $1.5 billion in renewables from 2017 through 2019. The company also aims to spend $13 billion in its transmission and distribution systems to make them more technologically resilient and responsive.

Meanwhile, the company has achieved a 44% reduction in carbon dioxide emissions since 2000, with the help of monitored and managed use of energy. This reflects a major improvement on American Electric’s part toward achieving more renewable assets.

Moreover, the company has made notable investments in past few months and currently owns nearly 100 projects, both wind and solar, as part of its AEP Renewables subsidiary. It made investments worth $145 million in only two of those projects, both solar, one in Utah and one in Nevada.

Additionally, the company has invested about $50 million in 18 projects operating in eight different states through AEP Onsite Partners, which is American Electric’s customer solutions business. Currently, the company has a number of projects under construction with an expected cost of another $50 million to be in service in the second quarter.

Owing to the company's Ohio merchant coal-fired generation assets divestment, the company gained $127 million. The asset divestiture is in line with American Electricity’s strategy of transitioning itself from a wholesale electricity provider to a fully regulated, premium energy company.

Impressively, American Electric continues to boast a strong liquidity position of $2.7 billion as of Mar 31, 2017, which will allow the company to finance its high-growth projects in the future.

In fact, the company has been a consistent performer, having delivered positive earnings surprises in three out of the trailing four quarters with average surprise of 8.45%. American Electric’s long-term earnings growth is presently pegged at 5.60%, better than the industry average of 5.10%. Also its current quarter estimates have improved by a penny to 88 cents in past 60 days.

Stocks to Consider

American Electric Power currently carries a Zacks Rank #3 (Hold). Investors can consider better-ranked stocks from the same industry like Algonquin Power & Utilities Corp. (TO:AQN) , Avangrid, Inc. (NYSE:AGR) and Unitil Corporation (NYSE:UTL) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Algonquin Power & Utilities reported a positive earnings surprise of 11.76% in the first quarter of 2017. Its current quarter 2017 estimates have risen by 25% to 10 cents per share in the last 30 days.

Avangrid reported a positive earnings surprise of 7.35% in the first quarter of 2017. Its 2017 estimates have risen by 0.5% to $2.21 per share in the last 60 days.

Unitil reported a positive earnings surprise of 2.33% first quarter of 2017. Its 2017 estimates have risen by 1% to $2.09 per share in the last 60 days.

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