AES (AES) AI Stock Analysis

• Market Cap: $10.20B
• Dividend Yield: 4.89%
• Average Volume (3M): 11.90M
• Price to Earnings (P/E): 10.1
• Beta (1Y): 0.95
• Revenue Growth: -3.19%
• EPS Growth: 30.48%
• Country: US
• Employees: 9,100
• Sector: Utilities
• Sector Strength: 65
• Industry: Diversified Utilities
• EPS (TTM): 0.51
• Shares Outstanding: 712,049,560
• 10 Day Avg. Volume: 8,806,632
• 30 Day Avg. Volume: 11,904,139
• 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 Cap: 4.13
• Enterprise Value/Revenue: 3.50
• Enterprise Value/Gross Profit: 20.71
• Enterprise Value/Ebitda: 12.58
• 1Y Price Target: $17.00
• Price Target Upside: 18.72% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 65 Neutral
• Price Target: $15.50 ▲(8.24% Upside)

AES's overall stock score is driven by strong technical indicators and a positive earnings call outlook, particularly in the renewables segment. However, financial performance concerns, including high leverage and negative cash flow, weigh on the score. The attractive valuation provides some upside potential.

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 Business Overview & Revenue Model

Company Description

The 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 Money

AES 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 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

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

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

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 Price: 14.32
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 14.32 is above the 20-day moving average (MA) of 14.24, above the 50-day MA of 13.56, and above the 200-day MA of 11.77, indicating a bullish trend. The MACD of 0.30 indicates Positive momentum. The RSI at 53.61 is Neutral, neither overbought nor oversold. The STOCH value of 32.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AES.

AES Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIG	75 Outperform	$6.23B	4.90	22.94%	13.35%	-3.27%	-3.44%
SRE	75 Outperform	$60.50B	22.45	8.87%	2.77%	0.46%	-11.77%
ELP	74 Outperform	$7.15B	13.43	9.81%	5.68%	-5.28%	14.50%
ELPC	72 Outperform	$6.98B	12.15	9.81%	5.69%	-5.28%	14.50%
BIP	69 Neutral	$22.62B	1,787.11	1.06%	4.89%	8.86%	―
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
AES	65 Neutral	$10.20B	10.11	21.17%	4.89%	-3.19%	30.48%