American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE) are two leading players in the regulated electric utilities sector in the United States. Both companies focus on electricity generation, transmission, and distribution, serving millions of customers with diverse energy portfolios that include renewables and traditional sources. Their similar market presence and innovation strategies make them ideal candidates for comparison. In this article, I will help you identify which company offers the most compelling investment opportunity.
Table of contents
Companies Overview
I will begin the comparison between American Electric Power Company, Inc. and FirstEnergy Corp. 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 major electric public utility holding company that generates, transmits, and distributes electricity across the United States. Operating through vertically integrated utilities and transmission segments, it relies on diverse energy sources including coal, natural gas, nuclear, hydro, solar, and wind. Founded in 1906 and headquartered in Columbus, Ohio, AEP serves both retail and wholesale customers.
FirstEnergy Corp. Overview
FirstEnergy Corp. operates through its subsidiaries to generate, transmit, and distribute electricity primarily in six states, serving about 6 million customers. The company owns coal, nuclear, hydroelectric, natural gas, wind, and solar assets and controls extensive transmission and distribution networks. Incorporated in 1996 and based in Akron, Ohio, FirstEnergy focuses on regulated distribution and transmission segments.
Key similarities and differences
Both companies operate in the regulated electric utility industry with diversified energy generation portfolios including coal, nuclear, and renewables. They serve broad geographic areas in the US and manage transmission and distribution networks. However, AEP has a longer corporate history and larger market capitalization (about 62.6B vs. 25.8B for FirstEnergy), while FirstEnergy’s operations are more regionally concentrated, serving six states compared to AEP’s wider reach.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for American Electric Power Company, Inc. and FirstEnergy Corp. for the fiscal year 2024.
| Metric | American Electric Power Company, Inc. | FirstEnergy Corp. |
|---|---|---|
| Market Cap | 62.6B | 25.8B |
| Revenue | 19.9B | 13.5B |
| EBITDA | 8.1B | 4.1B |
| EBIT | 4.7B | 2.5B |
| Net Income | 3.0B | 978M |
| EPS | 5.6 | 1.7 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
American Electric Power Company, Inc.
American Electric Power (AEP) showed a steady revenue increase from $14.9B in 2020 to $19.9B in 2024, with net income rising from $2.2B to $3.0B over the same period. Margins remained relatively stable, with a favorable gross margin near 32% and net margin around 15%. In 2024, revenue growth slowed to 2.8%, but net income and EPS grew strongly, improving profitability.
FirstEnergy Corp.
FirstEnergy (FE) experienced revenue growth from $10.8B in 2020 to $13.5B in 2024, but net income declined from $1.1B to $978M. Gross margins were high at roughly 68%, yet net margin was lower at 7.3%. The latest year showed moderate revenue growth of 4.7%, but net margin and EPS deteriorated, indicating challenges in translating sales increases into bottom-line gains.
Which one has the stronger fundamentals?
AEP demonstrates stronger fundamentals with favorable overall income statement evaluations, including consistent revenue and net income growth, and improving margins. FE’s financials show weaker net income trends and unfavorable margin growth, despite solid gross margins. AEP’s stability and positive profitability trends contrast with FE’s declining net margins and earnings over the period.
Financial Ratios Comparison
Below is a comparison of the most recent key financial ratios for American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE) based on their 2024 fiscal year data.
| Ratios | American Electric Power (AEP) | FirstEnergy (FE) |
|---|---|---|
| ROE | 11.0% | 7.9% |
| ROIC | 5.0% | 3.7% |
| P/E | 16.5 | 23.4 |
| P/B | 1.81 | 1.84 |
| Current Ratio | 0.44 | 0.56 |
| Quick Ratio | 0.31 | 0.45 |
| D/E (Debt-to-Equity) | 1.70 | 1.95 |
| Debt-to-Assets | 44.4% | 46.6% |
| Interest Coverage | 2.56 | 2.35 |
| Asset Turnover | 0.19 | 0.26 |
| Fixed Asset Turnover | 0.24 | 0.33 |
| Payout Ratio | 64.2% | 99.2% |
| Dividend Yield | 3.9% | 4.2% |
Interpretation of the Ratios
American Electric Power Company, Inc.
American Electric Power shows a mixed ratio profile with a favorable net margin of 14.9% and dividend yield at 3.89%, but faces concerns in liquidity (current ratio 0.44) and leverage (debt-to-equity 1.7). Return on equity is neutral at 11.01%, while return on invested capital is unfavorable at 4.96%. The company maintains dividend payments supported by free cash flow, though some financial ratios suggest caution.
FirstEnergy Corp.
FirstEnergy’s ratios include a neutral net margin of 7.26% and a slightly higher dividend yield of 4.24%. However, its return on equity is unfavorable at 7.85%, with liquidity ratios below 1 and a debt-to-equity ratio of 1.95, indicating elevated leverage risk. The firm continues dividend payments, but several unfavorable ratios highlight potential operational and financial challenges.
Which one has the best ratios?
Both companies have a slightly unfavorable overall ratio assessment, but American Electric Power exhibits more favorable profitability and dividend yield metrics compared to FirstEnergy. FirstEnergy shows greater financial strain in leverage and returns despite a marginally higher dividend yield. Neither company presents a clearly superior ratio profile based on current data.
Strategic Positioning
This section compares the strategic positioning of American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE), including market position, key segments, and exposure to technological disruption:
American Electric Power Company, Inc. (AEP)
- Large market cap of 62.6B with moderate beta of 0.615; faces competition in regulated electric utilities.
- Diversified revenue streams: generation, transmission, distribution, plus vertically integrated utilities; generation includes coal, natural gas, nuclear, hydro, solar, wind.
- Exposure to technological disruption includes renewable energy sources but primarily in traditional regulated electric infrastructure.
FirstEnergy Corp. (FE)
- Smaller market cap of 25.8B and beta 0.626; operates in regulated electric utilities facing similar competitive pressures.
- Revenue mainly from regulated distribution and transmission; owns coal, nuclear, hydro, natural gas, wind, and solar facilities serving 6M customers.
- Also includes renewables but focused on regulated transmission and distribution networks, with limited unregulated competitive services.
American Electric Power Company, Inc. vs FirstEnergy Corp. Positioning
AEP shows a diversified business model with multiple segments including vertically integrated utilities, while FE concentrates on regulated transmission and distribution. AEP benefits from broader energy sources; FE serves a defined regional customer base, resulting in different risk exposures and operational scopes.
Which has the best competitive advantage?
Both companies are shedding value relative to their cost of capital, but AEP’s growing ROIC trend contrasts with FE’s declining profitability, indicating AEP currently holds a slightly stronger competitive advantage based on MOAT evaluation.
Stock Comparison
The stock price movements of American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE) over the past 12 months reveal significant bullish trends with decelerating momentum, accompanied by contrasting recent trading behaviors.
Trend Analysis
American Electric Power Company, Inc. (AEP) exhibited a strong bullish trend over the past year with a 43.71% price increase, though the trend shows deceleration and moderate volatility, ranging between 81.35 and 123.77.
FirstEnergy Corp. (FE) also showed a bullish trend with a 19.42% gain over the past year, marked by deceleration and lower volatility; however, recent price movement turned bearish with a 4.27% decline.
Comparing the two, AEP delivered the highest market performance with a stronger price appreciation and greater buyer dominance despite decreasing volume, unlike FE’s increasing volume but weaker recent price trend.
Target Prices
Analysts provide a clear consensus on target prices for American Electric Power Company, Inc. and FirstEnergy Corp.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| American Electric Power Company, Inc. | 138 | 107 | 126.82 |
| FirstEnergy Corp. | 54 | 46 | 49.29 |
The consensus target prices suggest potential upside for both AEP and FE compared to their current prices of 116.91 and 44.65, respectively, indicating moderately bullish analyst expectations.
Analyst Opinions Comparison
This section compares analysts’ ratings and financial scores for American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE):
Rating Comparison
AEP Rating
- Rating: B+ indicating a very favorable overall assessment.
- Discounted Cash Flow Score: 4, showing favorable valuation based on cash flow.
- ROE Score: 4, reflecting efficient profit generation from equity.
- ROA Score: 4, indicating strong asset utilization to generate earnings.
- Debt To Equity Score: 2, representing moderate financial risk.
- Overall Score: 3, categorized as moderate overall financial standing.
FE Rating
- Rating: B indicating a very favorable overall assessment.
- Discounted Cash Flow Score: 4, showing favorable valuation based on cash flow.
- ROE Score: 4, reflecting efficient profit generation from equity.
- ROA Score: 3, indicating moderate asset utilization effectiveness.
- Debt To Equity Score: 1, representing very unfavorable financial risk.
- Overall Score: 3, categorized as moderate overall financial standing.
Which one is the best rated?
Based on the provided data, AEP holds a slightly better rating of B+ compared to FE’s B. Both have equal overall scores and strong ROE and DCF scores, but AEP’s higher ROA and better debt-to-equity score give it a marginally stronger analyst profile.
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.
FE Scores
- Altman Z-Score: 0.784, indicating financial distress and high bankruptcy risk.
- Piotroski Score: 6, reflecting average financial strength.
Which company has the best scores?
Both AEP and FE are in the distress zone according to their Altman Z-Scores, with FE slightly lower. Both have an identical Piotroski Score of 6, indicating average financial strength. Neither company clearly outperforms the other based on these scores.
Grades Comparison
Here is an overview of the most recent grades assigned to American Electric Power Company, Inc. and FirstEnergy Corp.:
American Electric Power Company, Inc. Grades
The following table summarizes the latest grades from verified grading companies for American Electric Power Company, Inc.:
| 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 |
The overall grading trend for American Electric Power shows a mix of neutral to positive ratings, with notable maintenance of Overweight and Outperform grades and a recent upgrade to Buy by Jefferies.
FirstEnergy Corp. Grades
The following table summarizes the latest grades from verified grading companies for FirstEnergy Corp.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Neutral | 2025-12-17 |
| Mizuho | Maintain | Neutral | 2025-10-24 |
| Scotiabank | Maintain | Sector Outperform | 2025-10-24 |
| UBS | Maintain | Neutral | 2025-10-24 |
| Morgan Stanley | Maintain | Overweight | 2025-10-21 |
| Jefferies | Maintain | Hold | 2025-10-21 |
| Keybanc | Downgrade | Sector Weight | 2025-10-15 |
| Scotiabank | Maintain | Sector Outperform | 2025-10-06 |
| Morgan Stanley | Maintain | Overweight | 2025-09-25 |
| Barclays | Upgrade | Overweight | 2025-08-25 |
Grades for FirstEnergy are generally stable, mostly neutral to moderately positive, with several Overweight and Sector Outperform ratings maintained, despite a downgrade from Keybanc.
Which company has the best grades?
American Electric Power has received more Buy and Outperform ratings compared to FirstEnergy’s predominant Hold and Neutral ratings. This difference suggests a slightly stronger positive outlook for American Electric Power, which may influence investors seeking higher conviction in analyst opinions.
Strengths and Weaknesses
Below is a comparison table summarizing the key strengths and weaknesses of American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE) based on their financial performance, market presence, and innovation as of 2026.
| Criterion | American Electric Power Company, Inc. (AEP) | FirstEnergy Corp. (FE) |
|---|---|---|
| Diversification | Moderate; diversified revenue streams with strong transmission and distribution focus | Moderate; mainly regulated distribution and transmission with some competitive energy services |
| Profitability | Moderate profitability (Net Margin 14.9%, ROE 11.0%, ROIC 4.96% unfavorable vs WACC 5.52%) | Lower profitability (Net Margin 7.3%, ROE 7.9%, ROIC 3.66% unfavorable vs WACC 4.85%) |
| Innovation | Limited innovation noted; steady growth in ROIC (+28%) but still value destroying | Limited innovation; declining ROIC (-20%) indicating weakening performance |
| Global presence | Primarily US-focused with strong regional utilities | Primarily US-focused with regulated operations |
| Market Share | Strong in transmission and distribution with revenues nearing $5.9B in 2024 segment | Strong regulated distribution market share with $6.9B revenue in 2024 |
Key takeaways: AEP shows growing profitability and a stronger foothold in transmission and distribution, though it still destroys value overall. FE faces declining profitability and value destruction with weaker ROIC trends. Both companies have moderate diversification but limited innovation, implying cautious investment consideration.
Risk Analysis
Below is a comparison of key risks for American Electric Power Company, Inc. (AEP) and FirstEnergy Corp. (FE) based on the most recent 2024 data:
| Metric | American Electric Power (AEP) | FirstEnergy Corp. (FE) |
|---|---|---|
| Market Risk | Moderate (Beta 0.615) | Moderate (Beta 0.626) |
| Debt level | High (Debt/Equity 1.7, Neutral debt-to-assets 44.4%) | Very High (Debt/Equity 1.95, Neutral debt-to-assets 46.6%) |
| Regulatory Risk | Significant (Utility sector with evolving energy policies) | Significant (Similar sector exposure) |
| Operational Risk | Moderate (Asset turnover low, some unfavorable liquidity ratios) | Moderate (Similar operational metrics, slightly weaker) |
| Environmental Risk | Elevated (Coal and fossil fuel generation exposure) | Elevated (Coal, nuclear, fossil fuel exposure) |
| Geopolitical Risk | Low (US domestic operations) | Low (US domestic operations) |
Both utilities face notable risks related to high leverage and exposure to environmental regulations due to fossil fuel dependency. Their moderate market risk reflects stable but sensitive utility sector dynamics. AEP’s slightly better liquidity contrasts with FE’s very high debt, increasing FE’s financial risk. Environmental and regulatory risks remain the most impactful, as shifting policies and climate mandates could affect profitability and operations significantly. Both companies are currently in financial distress zones per Altman Z-Scores, indicating caution for investors regarding solvency risk.
Which Stock to Choose?
American Electric Power Company, Inc. (AEP) shows favorable income growth with a 33.6% revenue increase over five years and a strong net margin of 14.9%. Its financial ratios are slightly unfavorable overall, with a debt-to-equity ratio of 1.7 and a current ratio of 0.44, while profitability indicators are mixed. The company’s rating is very favorable with a B+ score, but its Altman Z-Score indicates financial distress. The MOAT evaluation signals value destruction despite improving profitability.
FirstEnergy Corp. (FE) reports a less favorable income trend, including a 9.4% net income decline over five years and a lower net margin of 7.3%. Its financial ratios are also slightly unfavorable, with a higher debt-to-equity ratio at 1.95 and a current ratio of 0.56. FE holds a very favorable B rating, yet exhibits financial distress per its Altman Z-Score. The MOAT rating is very unfavorable, reflecting declining profitability and value loss.
For investors prioritizing growth and income stability, AEP’s favorable income statement and improving profitability might appear more attractive. Conversely, those focused on dividend yield and value investing could find FE’s profile, despite its challenges, to align better with their risk tolerance. The global evaluations suggest a cautious approach, emphasizing the importance of individual risk profiles and investment strategies.
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 FirstEnergy Corp. to enhance your investment decisions:
