American Electric Power Company Inc (AEP)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	2,208,100	2,307,200	2,488,100	2,200,100	1,921,100
Total stockholders’ equity	US$ in thousands	25,246,700	23,893,400	22,433,200	20,550,900	19,632,200
ROE		8.75%	9.66%	11.09%	10.71%	9.79%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $2,208,100K ÷ $25,246,700K
= 8.75%

American Electric Power Company Inc.'s return on equity (ROE) has displayed a declining trend over the past five years. The ROE decreased from 9.79% in 2019 to 8.73% in 2023. While the company's ROE was relatively healthy in 2021 at 11.09%, it fell to 10.71% in 2020 and has further decreased in 2022 and 2023.

A decreasing ROE can indicate that the company may be less efficient in generating profits from shareholders' equity. This could be due to various factors such as declining profitability, increasing debt levels, or higher equity base. Investors and analysts may view a declining ROE as a cause for concern as it suggests a decrease in the company's ability to generate returns on the equity invested by shareholders.

Further analysis would be required to identify the specific reasons behind the declining ROE and whether it is a result of operational challenges, financial decisions, or external factors impacting the company's performance. Management may need to address these issues to improve the company's financial performance and enhance shareholder value in the future.