COLUMBUS, Ohio – American Electric Power (NASDAQ:AEP) today announced its decision to retain its retail energy business, AEP Energy, aligning with its growth and customer value strategy. The company also reiterated its 2024 earnings forecast, with an operating earnings guidance of $5.53 to $5.73 per share and a long-term growth rate of 6% to 7%.
AEP Energy, which serves over 700,000 customers across 28 territories in six states and Washington, D.C., will remain part of AEP's portfolio. The company's interim CEO and president, Ben Fowke, emphasized the subsidiary's role in supporting increasing energy demand in deregulated states and delivering customized energy solutions.
In addition to this strategic move, AEP disclosed the sale of its distributed resources business, AEP OnSite Partners, for an anticipated net cash gain of approximately $315 million after taxes and transaction fees. The transaction is expected to complete in the third quarter of 2024, subject to regulatory approvals.
The company is set to discuss these developments with investors at the Citi 2024 Energy Conference tomorrow. Updated cash flow forecasts are now available on AEP's investor relations website, with no changes to the company's equity financing plans ensuing from these business decisions.
AEP, headquartered in Columbus, Ohio, is a major utility operator, maintaining the largest electric transmission system in the United States. With nearly 17,000 employees, AEP operates over 40,000 miles of transmission lines and more than 225,000 miles of distribution lines, serving 5.6 million customers in 11 states. The company is also recognized for its substantial generating capacity, including nearly 6,000 megawatts from renewable sources, and its commitment to reducing its carbon dioxide emissions by 80% from 2005 levels by 2030, aiming for net zero by 2045.
InvestingPro Insights
As American Electric Power (AEP) reaffirms its commitment to growth and customer value, the latest metrics from InvestingPro paint a detailed picture of the company's financial health. AEP's market capitalization stands robust at $48.24 billion, reflecting investor confidence and a solid market presence. The company's P/E ratio, a key indicator of market expectations about future earnings, is currently at 17.01, suggesting a reasonable valuation relative to its earnings.
Significantly, AEP's dividend yield is at an attractive 3.84%, a testament to its consistent dividend policy. This aligns with one of the InvestingPro Tips highlighting AEP's impressive track record of raising its dividend for 14 consecutive years, demonstrating a strong commitment to returning value to shareholders. Moreover, AEP has managed to maintain dividend payments for over five decades, underscoring its financial stability and reliability as an income-generating investment.
The company's stock is trading near its 52-week high, with a price percentage of 99.1% of that peak, indicating a strong performance in the market. This is further supported by a substantial 17.43% return over the last three months, as noted in another InvestingPro Tip. For investors seeking to delve deeper into AEP's potential, additional insights are available on InvestingPro, with a total of 11 tips that could help in making more informed investment decisions. To access these insights, visit InvestingPro and use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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