AES (AES) AI Stock Analysis

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AES

(NYSE:AES)

Select Model

Neutral 58 (OpenAI - 4o)

Rating:58Neutral

Price Target:

$13.50

▲(2.58% Upside)

AES's overall stock score is driven by strong earnings call insights and attractive valuation, offset by mixed financial performance and technical indicators. The company's strategic focus on renewables and utilities provides a positive outlook, but challenges in cash flow and leverage need addressing.

Positive Factors

Renewables Growth

Significant growth in the renewables segment indicates AES's successful transition to cleaner energy, enhancing its competitive position in the energy market.

Strategic Partnerships

Strategic partnerships with major companies like Meta strengthen AES's market presence and ensure long-term revenue through secured PPAs.

Utilities Investment

Large-scale investments in utilities infrastructure enhance AES's service reliability and capacity, supporting long-term growth and customer satisfaction.

Negative Factors

Declining Revenue

Declining revenue trends can hinder AES's ability to invest in growth opportunities and may impact its competitive edge in the energy sector.

High Leverage

High leverage increases financial risk and can limit AES's flexibility to maneuver in changing market conditions, potentially affecting long-term stability.

Negative Free Cash Flow

Persistent negative free cash flow suggests AES's capital expenditures exceed its cash generation, which could constrain future investments and growth.

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

Market Cap

$9.37B

Dividend Yield5.32%

Average Volume (3M)8.92M

Price to Earnings (P/E)9.3

Beta (1Y)0.94

Revenue Growth-3.19%

EPS Growth30.48%

CountryUS

Employees9,100

SectorUtilities

Sector Strength65

IndustryDiversified Utilities

Share Statistics

EPS (TTM)0.51

Shares Outstanding712,049,560

10 Day Avg. Volume8,889,749

30 Day Avg. Volume8,919,041

Financial Highlights & Ratios

PEG Ratio<0.01

Price to Book (P/B)2.49

Price to Sales (P/S)0.74

P/FCF Ratio-1.96

Enterprise Value/Market Cap4.50

Enterprise Value/Revenue3.50

Enterprise Value/Gross Profit20.71

Enterprise Value/Ebitda12.58

Forecast

1Y Price Target

$16.08

Price Target Upside22.19% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

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 generates revenue primarily through the sale of electricity generated from its power plants. The company's revenue model is anchored in long-term power purchase agreements (PPAs) with utilities and large commercial customers, ensuring a steady cash flow. Additionally, AES earns income from the sale of renewable energy credits (RECs) and environmental attributes associated with its green energy production. The company has formed strategic partnerships with various stakeholders in the energy sector, which helps to enhance its market presence and operational efficiencies. Factors contributing to its earnings include the increasing demand for renewable energy, government incentives for clean energy projects, and its ability to effectively manage operational costs across its global portfolio.

AES Key Performance Indicators (KPIs)

Any

Revenue by Segment

Chart InsightsAES's revenue from the Renewables segment is showing strong growth, aligning with the company's strategic focus on expanding its renewables portfolio. The latest earnings call highlights a 56% increase in adjusted EBITDA for Renewables, driven by significant project additions and a robust backlog of PPAs. This growth is crucial as AES navigates asset sales and higher interest expenses impacting other segments. The Utilities segment also remains a key focus, with substantial investments planned, reinforcing AES's commitment to long-term growth in sustainable energy solutions.

Data provided by:

Main Street Data

AES Earnings Call Summary

Earnings Call Date:Jul 31, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Oct 30, 2025

Earnings Call Sentiment Positive

The earnings call showcased strong growth and positive developments in AES's renewables and utilities sectors, with significant new project additions and robust financial performance. While there were some impacts from asset sales and higher interest expenses, the overall trajectory and reaffirmation of guidance points to a strong outlook.

Q2-2025 Updates

Positive Updates

Renewables SBU Growth

The Renewables Strategic Business Unit (SBU) reported a significant 56% increase in adjusted EBITDA for the second quarter, reaching $240 million due to the addition of 3.2 gigawatts of new projects.

Record Project Backlog

AES reported a 12 gigawatt backlog of signed Power Purchase Agreements (PPAs), with 1.6 gigawatts signed this quarter alone, including a significant agreement with Meta. This solidifies AES's position as a leading provider of renewables to data centers.

Strong Financial Performance

AES achieved an adjusted EBITDA of $681 million in Q2 2025, up from $658 million the previous year, and an adjusted EPS of $0.51, marking a 34% increase from $0.38 in the prior year.

Utilities Investment Program

AES is executing the largest investment program in AES Indiana and AES Ohio's history, with $1.4 billion planned for 2025. This includes projects like the Pike County energy storage project and the Petersburg Energy Center.

Forward Guidance Reaffirmed

AES reaffirmed its 2025 guidance for adjusted EBITDA of $2.65 billion to $2.85 billion and EPS guidance of $2.10 to $2.26, driven by strong performance in renewables and utilities.

Negative Updates

Impact of Asset Sales

The lower EBITDA in the energy infrastructure SBU reflects the prior year recognition of the Warrior Run coal PPA monetization and the sale of AES Brazil, among others.

Higher Interest Expense

The company experienced higher parent interest expense, impacting overall financial performance despite the growth in other areas.

Company Guidance

During the AES Corporation's second quarter 2025 financial review call, the company reaffirmed its 2025 guidance and long-term growth targets, highlighting key financial metrics. They reported an adjusted EBITDA of $681 million and an adjusted EPS of $0.51 for the quarter. The renewables segment saw significant growth, with adjusted EBITDA rising by 56% to $240 million, driven by the addition of 3.2 gigawatts of new projects over the past year. AES completed 1.9 gigawatts of construction year-to-date and is 80% complete on the remaining 1.3 gigawatts, with plans to bring a total of 3.2 gigawatts online in 2025. They also emphasized their strong position in the data center market, having signed 1.6 gigawatts of new PPAs, including 650 megawatts with Meta, bringing their backlog to 12 gigawatts. The company is confident in its ability to achieve its financial objectives, supported by a robust renewables pipeline and a strategy centered on meeting customer needs while navigating changes in U.S. policy. AES reaffirmed its 2025 adjusted EBITDA guidance of $2.65 billion to $2.85 billion, with an expected adjusted EPS of $2.10 to $2.26, and emphasized its ongoing investment in renewables and utilities to drive future growth.

AES Financial Statement Overview

Summary

AES shows mixed financial performance with 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

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

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

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.03B	12.28B	12.68B	12.62B	11.14B	9.66B
Gross Profit	2.04B	2.32B	2.52B	2.55B	2.71B	2.69B
EBITDA	3.35B	3.67B	2.53B	1.94B	818.00M	2.53B
Net Income	1.01B	1.69B	242.00M	-546.00M	-413.00M	43.00M
Balance Sheet
Total Assets	48.54B	47.41B	44.80B	38.36B	32.96B	34.60B
Cash, Cash Equivalents and Short-Term Investments	1.35B	1.60B	1.82B	2.10B	1.18B	1.42B
Total Debt	30.27B	29.02B	26.88B	23.50B	18.70B	19.88B
Total Liabilities	40.86B	39.70B	38.81B	33.86B	28.40B	29.88B
Stockholders Equity	3.37B	3.64B	2.49B	2.44B	2.80B	2.63B
Cash Flow
Free Cash Flow	-2.55B	-4.64B	-4.69B	-1.84B	-214.00M	855.00M
Operating Cash Flow	3.59B	2.75B	3.03B	2.71B	1.90B	2.75B
Investing Cash Flow	-3.90B	-6.23B	-6.28B	-5.70B	-3.00B	-2.00B
Financing Cash Flow	205.00M	3.49B	3.49B	3.62B	741.00M	-372.00M

AES Technical Analysis

Technical Analysis Sentiment

Positive

Last Price13.16

Price Trends

50DMA

13.13

Positive

100DMA

12.13

Positive

200DMA

11.61

Positive

Market Momentum

MACD

0.05

Negative

RSI

52.86

Neutral

STOCH

71.40

Neutral

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 13.16 is above the 20-day moving average (MA) of 12.97, above the 50-day MA of 13.13, and above the 200-day MA of 11.61, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 52.86 is Neutral, neither overbought nor oversold. The STOCH value of 71.40 is Neutral, 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 (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIG	79 Outperform	$6.68B	5.25	26.00%	14.99%	-3.27%	-3.44%
ELPC	76 Outperform	$7.02B	12.47	11.89%	5.84%	-5.28%	14.50%
ELP	72 Outperform	$7.02B	13.54	11.89%	5.70%	-5.28%	14.50%
SRE	71 Outperform	$58.53B	21.72	8.56%	2.84%	0.46%	-11.77%
BIP	64 Neutral	$21.60B	1,706.70	4.04%	5.15%	8.86%	―
AES	58 Neutral	$9.37B	9.29	21.17%	5.32%	-3.19%	30.48%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%

* Utilities Sector Average

Performance Comparison

AES

15.37

-3.41

-18.16%

BIP

Brookfield Infrastructure

32.89

0.34

1.04%

CIG

Companhia Energetica Minas Gerais

2.04

0.17

9.09%

ELP

Companhia Paranaense de Energia Pfd

9.80

2.71

38.22%

SRE

Sempra Energy

89.98

8.62

10.59%

ELPC

Companhia Paranaense de Energia Sponsored ADR

8.96

2.65

42.00%

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: Sep 19, 2025