American Electric Power - Comparative Multiple Analysis

American Electric Power (Comparative Multiple Analysis)


Notes on the Comparative Multiple Analysis of American Electric Power

WikiWealth compares American Electric Power's revenue, EBITDA, and EBIT multiples to their peers in order to determine the appropriate fair valuation. Click in the top right corner to experiment with American Electric Power's comparative analysis.

Notes from the analysis:

1. WikiWealth uses quantitative measures to determine the multiple range for American Electric Power.
2. Free cash flow to the firm (FCF) multiple is free cash flow to equity holders plus interest owed to American Electric Power's debt holders.
3. Multiples incorporate benefits due to economies of scale; WikiWealth compares absolute enterprise value multiples to competitor's multiples.
4. WikiWealth excludes outliers when calculating individual company multiples.

Helpful Information for American Electric Power's Analysis

How does this work? The Comparative Investment Analysis determines the value of American Electric Power by comparing American Electric Power financial ratios, prices, growth rates, margins, etc. to those of relevant peer groups.

Value Investing Importance? This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of American Electric Power.

See the American Electric Power cash flow (DCF) analysis for a completely different approach that's popular on Wall Street for determining the value of an investment in American Electric Power.

Also, see the American Electric Power's buffett intrinsic valuation analysis for WikiWealth's attempt to replicate the investing formula's used by Warren Buffett and American Electric Power's valuation conclusion for a quick summary.