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AES Corp (AES)
NYSE:AES

AES (AES) AI Stock Analysis

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AE

AES

(NYSE:AES)

Rating:51Neutral
Price Target:
$10.00
▼(-4.85%Downside)
AES's overall score reflects financial challenges such as high leverage and negative cash flow, offset by a strong valuation and positive earnings call sentiment. The technical outlook remains bearish, although the company's strategic focus on renewables offers long-term potential.
Positive Factors
Asset Sales
The $450M monetization of a 17.5% stake in its captive insurer, AGIC, was a surprising and creative move that helps de-risk its 2025 asset sale target.
Financial Performance
Management reaffirmed all of financial targets for '25 and '27.
Negative Factors
Regulatory Risk
Macroeconomic trends including tariffs, and potential adverse changes to the IRA with an increasingly likely phase-out of tax credits are all negative data points looming over the sector and the stock.
Renewable Energy
Renewable PPA bookings of 443 MW came in below expectations.

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 Corporation makes money primarily through the generation and sale of electricity. The company's key revenue streams include its regulated utilities and the sale of power through long-term contracts, power purchase agreements (PPAs), and wholesale markets. AES operates power plants and sells electricity to residential, commercial, and industrial customers. The company also generates revenue from renewable energy projects, including wind, solar, and battery storage, which are often supported by government incentives and contracts with utility companies. Significant partnerships with other energy companies and investments in energy infrastructure assets also contribute to AES's earnings by enhancing its market reach and operational efficiency.

AES Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 5.63%|
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 notable strengths in profitability and ROE improvement. However, declining revenue, high leverage, and negative free cash flow present significant concerns. The company needs to manage its capital expenditures and leverage to ensure sustainable growth and stability.
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.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
12.12B12.28B12.67B12.62B11.14B9.66B
Gross Profit
2.13B2.31B2.50B2.55B2.71B2.69B
EBIT
1.84B2.03B2.25B2.35B2.57B2.53B
EBITDA
2.76B3.67B2.53B3.40B903.00M3.60B
Net Income Common Stockholders
1.22B1.68B249.00M-546.00M-409.00M46.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.82B1.60B1.82B2.10B1.18B1.42B
Total Assets
48.62B47.41B44.80B38.36B32.96B34.60B
Total Debt
30.58B29.02B26.88B23.50B18.70B19.88B
Net Debt
28.82B27.49B25.45B22.12B17.76B18.79B
Total Liabilities
40.89B38.76B37.35B33.86B28.40B29.88B
Stockholders Equity
3.47B3.64B2.49B2.44B2.80B2.63B
Cash FlowFree Cash Flow
-3.49B-4.64B-4.69B-1.84B-214.00M855.00M
Operating Cash Flow
3.01B2.75B3.03B2.71B1.90B2.75B
Investing Cash Flow
-6.60B-7.70B-8.19B-5.84B-3.05B-2.29B
Financing Cash Flow
3.67B4.96B5.41B3.76B797.00M-78.00M

AES Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price10.51
Price Trends
50DMA
10.80
Negative
100DMA
11.05
Negative
200DMA
13.23
Negative
Market Momentum
MACD
-0.20
Positive
RSI
48.94
Neutral
STOCH
71.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AES, the sentiment is Neutral. The current price of 10.51 is below the 20-day moving average (MA) of 10.86, below the 50-day MA of 10.80, and below the 200-day MA of 13.23, indicating a bearish trend. The MACD of -0.20 indicates Positive momentum. The RSI at 48.94 is Neutral, neither overbought nor oversold. The STOCH value of 71.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AES.

AES Risk Analysis

AES disclosed 39 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 2 New Risks
1.
.-Management's Discussion and Analysis of Financial Condition and Results of Operations Q3, 2022
2.
Risk Factors Q3, 2022

AES Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
CICIG
82
Outperform
$6.33B4.1226.38%15.35%-4.14%13.02%
ELELP
79
Outperform
$6.45B12.659.22%4.94%-7.02%17.33%
77
Outperform
$6.45B11.629.22%4.90%-7.02%17.33%
SRSRE
72
Outperform
$50.73B17.129.76%3.28%-0.39%0.75%
BIBIP
64
Neutral
$21.73B2,867.590.47%4.98%12.40%-108.27%
64
Neutral
$8.53B10.254.70%4.38%4.14%-13.04%
AEAES
51
Neutral
$7.31B5.6129.79%6.85%-3.22%141.11%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AES
AES
10.51
-9.13
-46.49%
BIP
Brookfield Infrastructure
33.39
5.29
18.83%
CIG
Companhia Energetica Minas Gerais
1.82
0.15
8.98%
ELP
Companhia Paranaense de Energia Pfd
8.90
2.13
31.46%
SRE
Sempra Energy
75.95
2.32
3.15%
ELPC
Companhia Paranaense de Energia Sponsored ADR
8.14
2.15
35.89%

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
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.