American Electric Power (AEP +6.08%) stock gained 5.5% through 1:15 p.m. ET Wednesday despite missing on earnings this morning.
Heading into the utility company's third-quarter report, analysts forecast AEP would earn $1.81 per share on $5.6 billion in revenue. AEP apparently missed by a penny, though, reporting only $1.80 per share and sales of only $5.4 billion.
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AEP Q3 earnings
Or did AEP miss? Turns out, $1.80 was only AEP's operating earnings, while earnings as calculated according to generally accepted accounting principles (GAAP earnings) were actually $1.82, above analyst forecasts.
By that metric, AEP may actually have beaten expectations.
It wasn't a huge beat. From $1.80 a year ago to $1.82 today, AEP grew Q3 earnings less than 1% year over year. On the plus side, AEP says it will do better going forward.
Turning to guidance, management confirmed it expects full-year 2025 earnings to land "in the upper half of the range" for previous guidance: $5.75 to $5.95 per share. (Analysts are expecting $5.90 per share, by the way.) Furthermore, AEP says it may reach a "new, increased long-term operating earnings growth rate of 7-9% over the next five years," and this plan is "supported by an expected 10% annual growth in rate base."
NASDAQ: AEP
Key Data Points
Is AEP stock a buy?
So not great news for AEP customers perhaps -- their rates are going up. But pretty good news for shareholders.
I am not 100% convinced this makes AEP stock a buy though. Valued on consensus earnings for this year, AEP stock costs more than 20 times earnings. That seems like a lot to pay for single-digit earnings growth. Still, AEP's 3.3% dividend yield will help to make up some of the difference.
Good enough to buy? Perhaps.
