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AES Corporation (AES)
:AES

AES (AES) AI Stock Analysis

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AES

(NYSE:AES)

Rating:63Neutral
Price Target:
$11.00
▼(-4.51%Downside)
AES's overall stock score reflects mixed financial performance with significant concerns about high leverage and negative free cash flow. The technical analysis shows a neutral stance, but the stock is attractive from a valuation perspective due to its low P/E ratio and high dividend yield. The earnings call provides a positive outlook with strategic growth initiatives, especially in renewables.
Positive Factors
Asset Management
Recent asset sales have helped alleviate pressure on credit metrics, showcasing management's ability to extract value even in a subdued M&A environment.
Financial Performance
Management reaffirmed all of financial targets for '25 and '27, indicating strong confidence in future performance.
Negative Factors
Credit Metrics
Leverage metrics are still tracking close to AES's 4.5x threshold, which is crucial for preserving its investment-grade rating.
Market Sentiment
Investor sentiment has been bearish due to uncertainty of tax credits, asset sales, and coal asset retirements affecting adjusted EBITDA expectations and the dividend.

AES (AES) vs. SPDR S&P 500 ETF (SPY)

AES Business Overview & Revenue Model

Company DescriptionThe AES Corporation operates as a diversified power generation and utility company. It owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. The company also owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses a range of fuels and technologies to generate electricity, including coal, gas, hydro, wind, solar, and biomass; and renewables, such as energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 31,459 megawatts. It has operations in the United States, Puerto Rico, El Salvador, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe, and Asia. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.
How the Company Makes MoneyAES makes money through a combination of electricity generation and distribution, energy storage solutions, and renewable energy projects. Its revenue model is primarily based on long-term power purchase agreements, which provide a stable income stream. The company's key revenue streams include the sale of electricity generated from its diverse portfolio of thermal and renewable energy plants, including wind, solar, hydroelectric, and energy storage facilities. AES also engages in utility operations, providing energy services to residential, commercial, and industrial customers. Significant partnerships with government entities and private companies in various regions support its strategic growth and earnings, as AES continues to transition towards a more sustainable energy future.

AES Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 15.78%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view of AES Corporation's performance, highlighting strong growth and strategic achievements in renewable energy and utility investments, while also acknowledging anticipated declines in EBITDA and EPS from the previous year and potential tariff exposures. The company's reaffirmation of 2025 guidance and growth targets, along with successful asset sales and supply chain management, indicate a strong overall position.
Q1-2025 Updates
Positive Updates
Reaffirmation of 2025 Guidance and Growth Targets
AES Corporation reaffirmed its 2025 guidance and long-term growth targets, demonstrating confidence in their strategic plan and operational resilience.
Significant Renewable Energy Expansion
AES completed construction of 643 megawatts and signed or was awarded 443 megawatts of new PPAs, bringing their backlog to 11.7 gigawatts. They are on track to bring online approximately 3 gigawatts of new renewable projects this year.
Successful Asset Sale and Financing
AES achieved their asset sale proceeds target for the year, including a $450 million sale of a minority stake in their global insurance company. They have also completed all financings needed to address 2025 debt maturities.
Strong Supply Chain and Tariff Management
AES reported strong protections from tariffs and inflation impacts, with minimal exposure to potential future tariffs due to strategic supply chain decisions.
Robust Growth in U.S. Utilities
AES is executing the largest investment program in the history of both AES Indiana and AES Ohio, including $1.4 billion investments this year.
Negative Updates
Year-over-Year Decline in Adjusted EBITDA and EPS
Q1 2025 Adjusted EBITDA was $591 million, down from $640 million a year ago, and Adjusted EPS was $0.27, down from $0.50 last year. This decline was anticipated and primarily driven by previous year revenues and asset sales.
Potential Exposure to Tariffs in 2026
AES has a maximum potential tariff exposure of $50 million related to a small quantity of batteries being imported from Korea for projects coming online in 2026.
Company Guidance
During The AES Corporation's Q1 2025 Financial Review Call, the guidance reaffirmed their 2025 targets and highlighted their strong business resilience. The company reported an adjusted EBITDA of $591 million and an adjusted EPS of $0.27 for the first quarter. AES completed construction of 643 megawatts and secured 443 megawatts of new PPAs, increasing their backlog to 11.7 gigawatts. Asset sales, including a minority stake in their insurance company for $450 million, achieved their annual proceeds target. The company emphasized its robust supply chain strategy, with minimal tariff exposure, and highlighted significant growth in renewables, expecting 3 gigawatts of new projects online this year. AES maintained its 2025 guidance with adjusted EBITDA between $2.65 billion and $2.85 billion, and adjusted EPS between $2.10 and $2.26, supported by strategic partnerships and cost-saving initiatives.

AES Financial Statement Overview

Summary
AES shows mixed financial performance with strengths in profitability improvement and ROE, but faces concerns with declining revenue, high leverage, and negative free cash flow.
Income Statement
45
Neutral
The company's revenue has shown a declining trend recently, with a 3.08% decrease from 2023 to 2024. Gross profit margin is high at 100% for 2024, indicating effective cost management relative to revenue, but this is likely due to misclassification of data. The net profit margin improved significantly from 1.97% in 2023 to 6.92% in 2024, showcasing improved profitability. However, the EBIT and EBITDA margins have fallen, pointing to operational challenges.
Balance Sheet
50
Neutral
The debt-to-equity ratio is high at 1.70 in 2024, indicating significant leverage, which can pose financial risks. The equity ratio is relatively stable at 34.23%, suggesting a moderate reliance on equity financing. Return on equity improved to 23.30% in 2024, demonstrating effective use of equity to generate profits, though it fluctuates due to varying net income.
Cash Flow
35
Negative
The company experienced negative free cash flow, worsening from -$469M in 2023 to -$464M in 2024, indicating substantial capital expenditures surpassing operating cash flow. The operating cash flow to net income ratio improved to 3.24 in 2024, suggesting better cash generation relative to net income. However, the cash flow situation remains challenging with high capital expenditure needs.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue12.12B12.28B12.67B12.62B11.14B9.66B
Gross Profit2.13B2.31B2.50B2.55B2.71B2.69B
EBITDA2.76B3.67B2.53B3.40B903.00M3.60B
Net Income1.22B1.68B249.00M-546.00M-409.00M46.00M
Balance Sheet
Total Assets48.62B47.41B44.80B38.36B32.96B34.60B
Cash, Cash Equivalents and Short-Term Investments1.82B1.60B1.82B2.10B1.18B1.42B
Total Debt30.58B29.02B26.88B23.50B18.70B19.88B
Total Liabilities40.89B38.76B37.35B33.86B28.40B29.88B
Stockholders Equity3.47B3.64B2.49B2.44B2.80B2.63B
Cash Flow
Free Cash Flow-3.49B-4.64B-4.69B-1.84B-214.00M855.00M
Operating Cash Flow3.01B2.75B3.03B2.71B1.90B2.75B
Investing Cash Flow-6.60B-7.70B-8.19B-5.84B-3.05B-2.29B
Financing Cash Flow3.67B4.96B5.41B3.76B797.00M-78.00M

AES Technical Analysis

Technical Analysis Sentiment
Positive
Last Price11.52
Price Trends
50DMA
10.75
Positive
100DMA
11.01
Positive
200DMA
12.62
Negative
Market Momentum
MACD
0.11
Negative
RSI
60.96
Neutral
STOCH
88.16
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AES, the sentiment is Positive. The current price of 11.52 is above the 20-day moving average (MA) of 10.93, above the 50-day MA of 10.75, and below the 200-day MA of 12.62, indicating a neutral trend. The MACD of 0.11 indicates Negative momentum. The RSI at 60.96 is Neutral, neither overbought nor oversold. The STOCH value of 88.16 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AES.

AES Risk Analysis

AES disclosed 3 risk factors in its most recent earnings report. AES reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

AES Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
CICIG
80
Outperform
$6.56B4.5326.38%16.53%-4.14%13.02%
CICIG
80
Outperform
$6.56B4.5326.38%16.53%-4.14%13.02%
77
Outperform
$6.60B12.039.22%3.33%-7.02%17.33%
ELELP
73
Outperform
$6.47B12.689.22%3.40%-7.02%17.33%
ELELP
73
Outperform
$6.47B12.689.22%3.40%-7.02%17.33%
SRSRE
64
Neutral
$48.99B16.539.76%3.43%-0.39%0.75%
SRSRE
64
Neutral
$48.99B16.539.76%3.43%-0.39%0.75%
AEAES
63
Neutral
$8.20B6.2929.79%6.11%-3.22%141.11%
62
Neutral
€6.89B3.78-1.70%4.51%9.31%-12.31%
BIBIP
58
Neutral
$22.22B2,867.590.47%5.05%12.40%-108.27%
BIBIP
58
Neutral
$22.22B2,867.590.47%5.05%12.40%-108.27%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AES
AES
11.52
-5.70
-33.10%
BIP
Brookfield Infrastructure
33.18
6.29
23.39%
BIP
Brookfield Infrastructure
33.18
6.29
23.39%
CIG
Companhia Energetica Minas Gerais
2.00
0.39
24.22%
CIG
Companhia Energetica Minas Gerais
2.00
0.39
24.22%
ELP
Companhia Paranaense de Energia Pfd
8.93
2.16
31.91%
ELP
Companhia Paranaense de Energia Pfd
8.93
2.16
31.91%
SRE
Sempra Energy
74.39
1.58
2.17%
SRE
Sempra Energy
74.39
1.58
2.17%
ELPC
Companhia Paranaense de Energia Sponsored ADR
8.28
2.30
38.46%

AES Corporate Events

Executive/Board ChangesShareholder Meetings
AES Approves 2025 Equity and Incentive Plan
Neutral
May 9, 2025

On May 9, 2025, AES Corporation held its Annual Meeting of Stockholders, where several key proposals were approved, including the 2025 Equity and Incentive Compensation Plan. This plan authorizes the issuance of 14,000,000 shares of common stock and includes various performance and incentive awards for employees and directors, aiming to align their interests with company growth and shareholder value. Additionally, the meeting saw the election of eleven directors and the ratification of Ernst & Young LLP as the independent auditor for fiscal year 2025.

Business Operations and StrategyFinancial Disclosures
AES Reports Q1 2025 Financial Results with Net Loss
Negative
May 1, 2025

On May 1, 2025, AES Corporation announced its financial results for the first quarter of 2025, reporting a net loss of $73 million compared to a net income of $278 million in the same quarter of 2024. Despite the decrease in net income, AES reaffirmed its 2025 guidance and long-term growth targets, highlighting strategic accomplishments such as completing 643 MW of energy storage and solar projects, signing new PPAs, and achieving asset sale proceeds targets. The company also noted higher contributions from its Utilities and Renewables SBUs, offset by lower contributions from the Energy Infrastructure SBU due to prior year revenue factors.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 02, 2025