In the evolving landscape of the regulated electric utility sector, American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D) stand out as key players with significant market presence. Both companies operate extensive generation and distribution networks, embracing innovation through diversified energy portfolios including renewables. This comparison explores their strategic positioning and financial health to help investors discern which stock could be the better addition to their portfolios in 2026. Let’s dive into their fundamentals to guide your investment choice.
Table of contents
Companies Overview
I will begin the comparison between American Electric Power Company, Inc. and Dominion Energy, Inc. by providing an overview of these two companies and their main differences.
American Electric Power Company, Inc. Overview
American Electric Power Company, Inc. is a U.S.-based electric public utility holding company engaged in the generation, transmission, and distribution of electricity. Operating through multiple segments, AEP uses diverse energy sources including coal, natural gas, nuclear, hydro, solar, and wind. Founded in 1906 and headquartered in Columbus, Ohio, AEP serves retail and wholesale customers across the United States.
Dominion Energy, Inc. Overview
Dominion Energy, Inc. produces and distributes energy primarily in Virginia, North Carolina, and South Carolina, operating through four segments including electric generation and gas distribution. The company focuses on regulated electricity and natural gas services while also developing renewable and LNG facilities. Founded in 1983 and headquartered in Richmond, Virginia, Dominion serves millions of residential, commercial, and industrial customers.
Key similarities and differences
Both AEP and Dominion Energy operate in the regulated electric utilities sector in the U.S., focusing on electricity generation and distribution. AEP has a broader mix of energy sources including nuclear and wind, while Dominion places notable emphasis on gas distribution and renewable natural gas. Each company serves a large customer base, but their geographic footprints and segment structures differ, reflecting distinct approaches to energy production and delivery.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D) for the fiscal year 2024.
| Metric | American Electric Power Company, Inc. (AEP) | Dominion Energy, Inc. (D) |
|---|---|---|
| Market Cap | 62.6B | 49.5B |
| Revenue | 19.9B | 14.5B |
| EBITDA | 8.1B | 6.7B |
| EBIT | 4.7B | 4.1B |
| Net Income | 3.0B | 2.1B |
| EPS | 5.60 | 2.44 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
American Electric Power Company, Inc.
American Electric Power Company, Inc. has exhibited steady revenue growth from $14.9B in 2020 to nearly $20B in 2024, with net income rising from $2.2B to $3B over the same period. Margins remained favorable, particularly gross margin at 31.92% and EBIT margin at 23.6%. In 2024, revenue growth slowed to 2.76%, but net margin and EPS improved significantly, indicating enhanced profitability.
Dominion Energy, Inc.
Dominion Energy, Inc. showed modest revenue growth from $11.4B in 2021 to $14.5B in 2024, with net income fluctuating notably but reaching $2.04B in 2024. While gross margin remained strong at 47.87% and EBIT margin at 28.14%, interest expense was higher at 13.05%. The latest year saw a slight revenue increase of 0.46%, but net income and EPS growth were positive, reflecting operational efficiency gains.
Which one has the stronger fundamentals?
Both companies present favorable income statements with strong margins and improving net income, but American Electric Power stands out with more consistent revenue growth and significant EPS gains. Dominion Energy displays higher gross and EBIT margins but struggles with elevated interest expenses and less stable revenue growth. Overall, AEP’s steady expansion contrasts with D’s more volatile income trends.
Financial Ratios Comparison
The table below presents a side-by-side comparison of key financial ratios for American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D) based on the most recent fiscal year 2024 data.
| Ratios | American Electric Power Company, Inc. (AEP) | Dominion Energy, Inc. (D) |
|---|---|---|
| ROE | 11.0% | 7.8% |
| ROIC | 5.0% | 2.9% |
| P/E | 16.5 | 21.3 |
| P/B | 1.81 | 1.66 |
| Current Ratio | 0.44 | 0.71 |
| Quick Ratio | 0.31 | 0.52 |
| D/E | 1.70 | 1.53 |
| Debt-to-Assets | 44.4% | 40.8% |
| Interest Coverage | 2.56 | 1.72 |
| Asset Turnover | 0.19 | 0.14 |
| Fixed Asset Turnover | 0.24 | 0.21 |
| Payout ratio | 64.2% | 105.4% |
| Dividend yield | 3.89% | 4.95% |
Interpretation of the Ratios
American Electric Power Company, Inc.
American Electric Power shows a mix of strengths and weaknesses in its financial ratios. The net margin and dividend yield are favorable, supporting profitability and shareholder returns. However, concerns include a low current and quick ratio, high debt-to-equity ratio, and weak asset turnover metrics. The company pays dividends with a solid yield of 3.89%, indicating consistent shareholder returns, though some financial leverage risks remain.
Dominion Energy, Inc.
Dominion Energy demonstrates favorable net margin and dividend yield, but weaker returns on equity and invested capital compared to AEP. Its current and quick ratios remain below ideal levels, and it faces a somewhat higher unfavorable ratio percentage. Dividend yield stands at 4.95%, with ongoing distributions despite some financial constraints. Overall, the company maintains shareholder returns but must manage debt and operational efficiency carefully.
Which one has the best ratios?
Both companies have a slightly unfavorable overall ratios evaluation, with 21.43% favorable ratios each. American Electric Power has a better return on equity and asset turnover but also more unfavorable liquidity and leverage ratios. Dominion Energy has a higher dividend yield but weaker profitability metrics. Neither company clearly outperforms the other across all key financial indicators.
Strategic Positioning
This section compares the strategic positioning of American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D), focusing on Market position, Key segments, and Exposure to technological disruption:
American Electric Power Company, Inc. (AEP)
- Large market cap of $62.6B in regulated electric utilities with moderate beta of 0.615, facing typical sector pressure.
- Diversified segments including vertically integrated utilities, transmission, generation, and marketing with revenues over $5.8B in transmission/distribution.
- Generates electricity from diverse sources including coal, natural gas, nuclear, hydro, solar, and wind, indicating mixed exposure to disruption.
Dominion Energy, Inc. (D)
- Market cap $49.5B in regulated electric utilities, beta 0.699, exposed to competitive and regulatory pressures.
- Concentrated segments with emphasis on Dominion Energy Virginia, gas distribution, and contracted energy totaling over $10B in Virginia alone.
- Operates regulated electricity, gas distribution, and renewable energy contract assets, balancing traditional and renewable technologies.
American Electric Power Company, Inc. vs Dominion Energy, Inc. Positioning
AEP pursues a diversified business model spanning multiple utility segments and energy sources, offering broad revenue streams. D concentrates on regional electricity and gas distribution, with a strong focus on contractual renewable assets, possibly limiting diversification but enhancing segment specialization.
Which has the best competitive advantage?
Both AEP and D show slightly unfavorable MOAT evaluations, shedding value despite growing ROIC trends, indicating improving profitability but challenges in exceeding cost of capital. Neither currently demonstrates a strong competitive advantage based on the provided MOAT data.
Stock Comparison
Over the past 12 months, American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D) have exhibited distinct bullish trends with notable price appreciation and slowing momentum toward the end of the period.
Trend Analysis
American Electric Power Company, Inc. (AEP) showed a strong bullish trend over the past year with a 43.71% price increase, though its acceleration has decelerated recently, and volatility remains elevated at a 10.6% standard deviation.
Dominion Energy, Inc. (D) also experienced a bullish trend over the last 12 months with a 26.43% price rise, but its trend has similarly decelerated, accompanied by lower volatility at a 4.03% standard deviation.
Comparing both stocks, AEP delivered the highest market performance with a larger price gain, while D showed moderate bullish momentum and lower price volatility during the same period.
Target Prices
Analysts present a moderately bullish target consensus for these regulated electric utilities.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| American Electric Power Company, Inc. | 138 | 107 | 126.82 |
| Dominion Energy, Inc. | 70 | 63 | 66 |
The target consensus prices for American Electric Power and Dominion Energy suggest potential upside from current prices of $116.91 and $57.98, respectively. Analysts expect moderate gains reflecting stable utility sector fundamentals.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D):
Rating Comparison
AEP Rating
- Rating: B+, considered very favorable by analysts.
- Discounted Cash Flow Score: 4, indicating a favorable valuation outlook.
- ROE Score: 4, showing strong profit generation from shareholders’ equity.
- ROA Score: 4, reflecting effective utilization of assets to generate earnings.
- Debt To Equity Score: 2, suggesting moderate financial risk with some leverage.
- Overall Score: 3, a moderate summary of financial standing.
D Rating
- Rating: C+, also marked very favorable by analysts.
- Discounted Cash Flow Score: 4, similarly favorable valuation perspective.
- ROE Score: 3, moderate efficiency in generating profit from equity.
- ROA Score: 1, considered very unfavorable in asset utilization.
- Debt To Equity Score: 3, also moderate financial risk but slightly higher.
- Overall Score: 2, indicating a more moderate but lower financial standing.
Which one is the best rated?
Based strictly on the provided data, AEP holds a higher rating (B+) compared to D’s C+. AEP also scores better across ROE, ROA, and overall financial metrics, signaling stronger analyst confidence in its financial efficiency and stability.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for both companies:
AEP Scores
- Altman Z-Score: 0.998, indicating financial distress and high bankruptcy risk.
- Piotroski Score: 6, reflecting average financial strength.
D Scores
- Altman Z-Score: Unavailable, no data provided.
- Piotroski Score: 7, indicating strong financial health.
Which company has the best scores?
Based on the available data, D has a stronger Piotroski Score of 7 compared to AEP’s 6. However, AEP’s Altman Z-Score shows financial distress, while D’s is unavailable, preventing a full comparison on bankruptcy risk.
Grades Comparison
Here is a comparison of the recent grades assigned to American Electric Power Company, Inc. and Dominion Energy, Inc.:
American Electric Power Company, Inc. Grades
The table below summarizes recent grades from various reputable grading companies for AEP:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Sell | 2025-12-17 |
| JP Morgan | Maintain | Neutral | 2025-12-12 |
| Jefferies | Upgrade | Buy | 2025-11-17 |
| Citigroup | Maintain | Neutral | 2025-10-31 |
| Wells Fargo | Maintain | Overweight | 2025-10-30 |
| Evercore ISI Group | Maintain | Outperform | 2025-10-30 |
| Morgan Stanley | Maintain | Overweight | 2025-10-30 |
| Mizuho | Maintain | Neutral | 2025-10-30 |
| BMO Capital | Downgrade | Market Perform | 2025-10-30 |
| Scotiabank | Maintain | Sector Perform | 2025-10-30 |
Overall, AEP’s grades show a mix of neutral to positive ratings, with some downgrades and a sell rating indicating cautious sentiment.
Dominion Energy, Inc. Grades
Below are the recent grades issued by recognized grading firms for Dominion Energy:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | Maintain | Overweight | 2025-12-17 |
| JP Morgan | Maintain | Underweight | 2025-12-11 |
| BMO Capital | Maintain | Market Perform | 2025-11-03 |
| Morgan Stanley | Maintain | Equal Weight | 2025-10-22 |
| Barclays | Maintain | Overweight | 2025-10-07 |
| Morgan Stanley | Maintain | Equal Weight | 2025-09-25 |
| JP Morgan | Maintain | Underweight | 2025-08-21 |
| JP Morgan | Maintain | Underweight | 2025-07-15 |
| Morgan Stanley | Maintain | Equal Weight | 2025-06-18 |
| Morgan Stanley | Maintain | Equal Weight | 2025-05-22 |
Dominion’s grades predominantly range from underweight to equal weight, with occasional overweight ratings, indicating a mostly neutral to cautious outlook.
Which company has the best grades?
American Electric Power Company, Inc. has generally received better grades than Dominion Energy, Inc., with more buy and outperform ratings versus Dominion’s underweight and equal weight consensus. This suggests relatively stronger market confidence in AEP’s prospects, which could influence investor sentiment and portfolio positioning.
Strengths and Weaknesses
Below is a comparative overview of key strengths and weaknesses for American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D), based on their latest financial and operational data.
| Criterion | American Electric Power (AEP) | Dominion Energy (D) |
|---|---|---|
| Diversification | Moderate diversification with focus on transmission, distribution, generation, and marketing segments. | Moderate diversification centered on power generation, gas infrastructure, and regional energy utilities. |
| Profitability | Net margin strong at 14.9%, but ROIC (4.96%) below WACC (5.52%), indicating value destruction despite growing ROIC trend. | Similar net margin (14.69%) but lower ROIC (2.86%) vs WACC (5.34%), also shedding value though profitability improves. |
| Innovation | Limited indication of strong innovation focus, with steady but slow asset turnover (0.19) and fixed asset turnover (0.24). | Also limited innovation metrics, with lower asset turnover (0.14) and fixed asset turnover (0.21), indicating operational efficiency challenges. |
| Global presence | Primarily US-based operations, concentrated in vertically integrated utilities and transmission/distribution. | Also primarily US-focused, especially in Virginia and South Carolina, with emphasis on regional energy infrastructure. |
| Market Share | Large market share in transmission and distribution (approx. $5.9B revenue in 2024), strong vertically integrated utility presence. | Significant market share in regional power generation and gas distribution, with Dominion Energy Virginia alone generating over $10B in 2024. |
Key takeaways: Both AEP and Dominion Energy demonstrate solid net margins but face challenges as their ROICs fail to exceed their costs of capital, signaling value destruction despite improving profitability trends. Their moderate diversification and regional focus limit global exposure, and operational efficiency metrics suggest room for improvement in innovation and asset utilization. Investors should weigh these factors carefully, emphasizing risk management.
Risk Analysis
Below is a comparative table outlining key risk factors for American Electric Power Company, Inc. (AEP) and Dominion Energy, Inc. (D) based on the most recent fiscal year 2024 data:
| Metric | American Electric Power (AEP) | Dominion Energy (D) |
|---|---|---|
| Market Risk | Moderate (Beta 0.615) | Moderate (Beta 0.699) |
| Debt Level | High (Debt-to-Equity 1.7, Unfavorable) | High (Debt-to-Equity 1.53, Unfavorable) |
| Regulatory Risk | Moderate (Utilities sector, regulated) | Moderate (Regulated Electric & Gas) |
| Operational Risk | Elevated (Low asset turnover, 0.19 unfavorable) | Elevated (Lower asset turnover, 0.14 unfavorable) |
| Environmental Risk | High (Coal & natural gas reliance; transition risk) | High (Gas and renewable mix; transition risk) |
| Geopolitical Risk | Low (US-focused operations) | Low (US-focused operations) |
Both AEP and Dominion Energy face considerable financial leverage risks with debt-to-equity ratios above 1.5, reflecting significant debt burdens. Operational efficiency remains a concern due to low asset turnover ratios, which may impact profitability. Environmental risk is notable as both companies rely on fossil fuels while transitioning to renewables, exposing them to regulatory and market pressures. Market risk is moderate, consistent with utility sector stability but sensitive to interest rates and policy changes. Geopolitical risk is minimal given their domestic U.S. focus. Investors should prioritize managing debt levels and monitoring regulatory developments in environmental policy.
Which Stock to Choose?
American Electric Power Company, Inc. (AEP) shows a favorable income statement with strong net margin growth and profitability, despite a slight revenue growth slowdown. Its financial ratios reveal mixed signals: favorable net margin and dividend yield, but unfavorable debt and liquidity ratios. The company is rated B+ with a very favorable overall rating but is slightly unfavorable on value creation as ROIC lags behind WACC.
Dominion Energy, Inc. (D) presents a favorable income profile with impressive net income and EPS growth over the period, although recent revenue growth is weak. Its financial ratios display favorable net margin and dividend yield but unfavorable returns and liquidity metrics. Rated C+ with a very favorable rating overall, it also faces a slightly unfavorable moat rating with ROIC below WACC.
Investors seeking growth-oriented opportunities might find AEP’s improving profitability and solid income statement appealing, while those prioritizing strong historical earnings growth and financial strength could view D’s performance as favorable. Both companies exhibit slightly unfavorable value creation metrics, suggesting cautious interpretation of their investment potential.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of American Electric Power Company, Inc. and Dominion Energy, Inc. to enhance your investment decisions:
