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AGL Energy Limited (AGLXY)
OTHER OTC:AGLXY
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AGL Energy
(OTC:AGLXY)
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Rating:55Neutral
Price Target:
$6.50
▲(6.04% Upside)
Action:ReiteratedDate:02/11/26
The score is held back primarily by weak financial performance (loss-making margins and deteriorating free cash flow). This is partially offset by a constructive technical trend and a positive earnings call focused on stronger H1 execution, improved cost outlook, liquidity, and capital recycling, while valuation is mixed due to the attractive yield but negative P/E.
Positive Factors
Battery & storage returns
High battery EBITDA and a ~24% annualised yield indicate storage assets are delivering strong, recurring cash returns. Durable earnings from grid-scale batteries diversify revenue away from volatile wholesale generation, support higher long-term margins and improve project IRR profiles for future firming investments.
Large development pipeline
A ~17.7% increase in pipeline to 11.3 GW provides substantial optionality to scale renewables and firming projects. This pipeline supports medium-term growth, secures future revenue opportunities (PPAs/merchant offtake) and positions the company to capture structural decarbonisation demand across customer and system services.
Capital recycling and liquidity
Material near-term liquidity and planned asset disposals provide durable balance-sheet flexibility to fund growth capex, reduce leverage or support dividends. Predictable capital recycling reduces reliance on spot markets and preserves strategic optionality for large-scale battery and firming investments.
Negative Factors
Negative profitability
Sustained negative net margin and ROE signal structural profitability pressure that limits internally generated equity returns. Without persistent margin recovery, the company faces constraints on reinvestment, dividend sustainability and the ability to self-fund the transition to more capital-intensive renewables and firming assets.
Weak free cash flow
Sharply negative free cash flow growth reduces funding available for capex, debt reduction and shareholder returns. Over a multi-quarter horizon this raises reliance on asset sales, external financing or dividend cuts and increases execution risk for multi-year development projects.
Higher depreciation, finance costs & net debt
Rising depreciation and finance costs from recent growth investments elevate fixed charges and interest sensitivity. Increased net debt to fund projects tightens covenant and credit headroom, making earnings more vulnerable to margin or wholesale price volatility over the medium term.
AGL Energy (AGLXY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.32B
Dividend Yield5.02%
Average Volume (3M)19.00
Price to Earnings (P/E)17.3
Beta (1Y)0.43
Revenue Growth4.67%
EPS Growth-112.83%
CountryUS
Employees3,735
SectorUtilities
Sector Strength65
IndustryIndependent Power Producers
Share Statistics
EPS (TTM)0.37
Shares Outstanding672,747,250
10 Day Avg. Volume0
30 Day Avg. Volume19
Financial Highlights & Ratios
PEG Ratio0.58
Price to Book (P/B)1.35
Price to Sales (P/S)0.47
P/FCF Ratio-23.06
Enterprise Value/Market Cap2.63
Enterprise Value/Revenue0.80
Enterprise Value/Gross Profit6.38
Enterprise Value/Ebitda7.41
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.67
Revenue Forecast (FY)$9.76B
AGL Energy Business Overview & Revenue Model
Company DescriptionAGL Energy Limited supplies energy and other services to residential, small and large businesses, and wholesale customers in Australia. It operates in three segments: Customer Markets, Integrated Energy, and Investments. The company engages in generating electricity through thermal, hydro, wind, and solar power generation plants; gas storage activities; and the retail sale of electricity, gas, solar, and energy products and services. The company operates electricity generation portfolio of 11,208 megawatts; the Newcastle gas storage facility in New South Wales; the Silver Springs underground gas storage facility in Queensland; natural gas production assets at Camden in New South Wales; and the North Queensland gas assets. It serves 4.2 million customer accounts. AGL Energy Limited was founded in 1837 and is based in Sydney, Australia.
How the Company Makes MoneyAGL Energy generates revenue through multiple channels, primarily through the sale of electricity and gas to residential, commercial, and industrial customers. The company's retail segment is a significant source of income, where it competes in the electricity and gas markets, offering competitive pricing and various energy plans. Additionally, AGL earns revenue from its generation assets, which produce electricity that is sold into the National Electricity Market (NEM). The company is also involved in the development and operation of renewable energy projects, which can provide long-term revenue streams through power purchase agreements (PPAs) and government incentives. Partnerships with technology providers for energy management solutions further bolster its earnings, as AGL expands into innovative services that enhance customer engagement and energy efficiency.
AGL Energy Earnings Call Summary
Earnings Call Date:Feb 10, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 19, 2026
Earnings Call Sentiment Positive
The call conveyed predominantly positive operational progress and strategic execution: stronger fleet availability and flexibility, notable battery performance, customer growth and higher consumer margins supported robust H1 results and enabled a narrowed FY '26 guidance range. However, near-term financial headwinds remain from increased depreciation and finance costs, higher net debt from growth investment, lower H1 volatility that constrained upside, and workforce engagement impacts. The business emphasized disciplined capital allocation, cost reductions (target $50 million p.a.), capital recycling (Tilt divestment) and continued large-scale battery and pipeline development to capture long-term demand tailwinds.Q2-2026 Updates
Positive Updates
Strong operational and financial momentum
Underlying NPAT of $353 million and EBITDA of $1.09 billion driven by improved generation availability, fleet flexibility and customer margin expansion.
Customer growth and satisfaction
Total services to customers increased by 108,000 (including ~45,000 Ampol services); customer satisfaction score rose to 83.8; strategic NPS positive at +4 and churn spread remained strong at 5.3 percentage points.
Consumer margin improvement
Consumer margin improved by 10% versus the prior half, reflecting a return to more sustainable levels and disciplined customer value management.
Battery performance and returns
Operated battery portfolio delivered $35 million EBITDA for the half, up $10 million (≈+40%) on the prior half; battery fleet achieved an EAF of 99% and Torrens Battery is generating an annualized yield of 24% (annualized EBITDA / $189 million project capex).
Flexible fleet realized premium
Flexible asset fleet delivered a realized premium of 20% to the time-weighted average market price for the half, 7 percentage points above FY '25, underpinned by coal flexibility, hydro, gas and batteries.
Development pipeline expansion
Development pipeline grew to 11.3 GW from 9.6 GW at FY '25, an increase of ~1.7 GW (~17.7%), providing significant optionality for renewables and firming projects.
Progress on large-scale projects and M&A
Construction commenced on 500 MW Tomago Battery; Liddell Battery expected to reach full operations in Q4 FY '26 (first 250 MW in the current quarter); acquisition of South Australia VPP (~$80 million) and signed PPAs for Palmer and Waddi wind farms.
Capital recycling and balance sheet actions
Agreement to divest 19.9% of Tilt Renewables for $750 million (expected Q3 settlement) and announced divestment of telco business to Aussie Broadband for ~ $115 million in shares, with partnership incentives to retain bundled customer benefits.
Cost productivity program and improved cash metrics
Announced a cost and productivity improvement program targeting sustainable net operating cost reductions of $50 million p.a. (full benefit FY '27); cash conversion increased 3 percentage points to 93% and liquidity remains ~ $1.2 billion (cash + undrawn facilities).
Strong capital markets access and credit profile
Successful $500 million AMTN bond issuance (7- and 10-year tenors) more than 10x oversubscribed; maintained Baa2 investment-grade rating with covenant headroom.
Guidance refinement and lower-than-expected operating cost growth
Narrowed FY '26 guidance ranges reflecting strong H1 performance; FY '26 operating cost increase now expected to be just under 2% (versus ~3% indicated in August).
Negative Updates
EBITDA flat and underlying profit headwinds
EBITDA remained broadly flat despite operational gains; underlying NPAT was lower than prior period due to higher depreciation & amortisation and increased finance costs.
Higher depreciation, amortisation and finance costs
Depreciation and amortisation increased due to investment in asset availability and shortening useful lives; uplift in depreciation revised down by $40 million to an expected ~ $860 million (total), and finance costs rose due to higher borrowings and facility rates.
Lower generation volumes and reduced market volatility
Overall generation volumes were 2.8% lower in the half driven by lower thermal utilization (partially offset by higher renewables); the half experienced unusually low spot price volatility which reduced opportunities to capture higher pricing.
Net debt increase from growth investment
Net debt increased driven by roughly $320 million of growth and strategic expenditures (Liddell Battery, K2 turbines, SAVPP acquisition) and $168 million in dividends paid; while rating held, leverage increased.
Employee engagement and workforce change
Employee engagement score fell to 69% (Pulse Survey); the company has undergone organisational restructure with role reductions, and total injury frequency rate saw a marginal increase.
Higher net bad debt in Customer Markets
Customer Markets OpEx fell overall but was partially offset by higher net bad debt expense driven by increased revenue.
Market-forward pricing and short-term downside risk
Near-term forward curves have eased (flat in Victoria and eased in New South Wales over the past 10 weeks) and are not reflecting the favourable long-term demand tailwinds, implying potential downside in short-term wholesale price expectations.
Uncertainty and timing to reach FID on some projects
Several late-stage projects and potential funding vehicles (including a 2+ GW wind portfolio) remain at early stages and subject to partner/funding decisions; Gippsland Skies offshore wind is no longer being pursued.
Earnings skew and guidance caveats
Earnings remain skewed to the first half (seasonality and legacy gas contract roll-offs) and FY '27 performance will be sensitive to wholesale price movements, cost-out delivery and battery roll-out/timing.
Company Guidance
AGL said it has narrowed FY‑26 guidance after a strong H1, declaring a fully‑franked interim ordinary dividend of $0.24 per share (consistent with its 50–75% underlying NPAT payout target) and reiterating an expectation to pay a fully‑franked full‑year dividend; H1 underlying NPAT was $353m and EBITDA $1.09bn. Management revised expected depreciation & amortisation to ~A$860m (down A$40m from prior expectations), now forecasts FY‑26 operating costs to rise just under 2% (versus the prior 3% assumption) and is targeting A$50m of sustainable net operating cost reductions per annum after CPI from FY‑27. FY‑26 growth capex is ~A$760m (roughly A$650m to firming projects) including ~A$190m remaining for Liddell and ~A$360m of the A$800m Tomago cost this year, with K2 turbine spend ~A$85m in FY‑26 (+~A$100m in FY‑27); sustaining capex is unchanged. The group said it is largely hedged for FY‑27, flagged strong battery performance (grid‑scale battery EBITDA A$35m in H1; Torrens annualised yield ~24%; targeting 7–11% ungeared post‑tax IRRs), reported operating cash conversion (ex. margin calls) of 93%, near A$1.2bn of cash and undrawn facilities, and expects Tilt proceeds of A$750m (Q3) plus ~A$115m in Aussie Broadband shares from the telco divestment to provide further balance‑sheet flexibility.AGL Energy Financial Statement Overview
Summary
Mixed fundamentals: slight revenue growth but negative net margin and pressured EBIT margins. Balance sheet leverage looks manageable, yet negative ROE signals weak profitability, and cash flow trends are concerning due to sharply negative free cash flow growth.Income Statement
AGL Energy's income statement shows a mixed performance. The company has experienced a slight revenue growth of 1.89% in the latest year, but profitability metrics are concerning. The net profit margin is negative at -0.71%, indicating losses. The gross profit margin has decreased over the years, and EBIT margin has significantly dropped, reflecting operational challenges. These factors suggest pressure on profitability despite revenue growth.45
Neutral
Balance Sheet
The balance sheet reveals a moderate financial position. The debt-to-equity ratio is manageable at 0.68, indicating a balanced approach to leveraging. However, the return on equity is negative, reflecting the company's inability to generate profits from shareholders' equity. The equity ratio is stable, suggesting a reasonable proportion of equity financing. Overall, the balance sheet shows stability but highlights profitability concerns.55
Neutral
Cash Flow
AGL Energy's cash flow statement indicates challenges in cash generation. The free cash flow growth rate is significantly negative, showing a decline in cash available for reinvestment. The operating cash flow to net income ratio is positive, suggesting some cash generation capability, but the free cash flow to net income ratio is negative, highlighting cash flow issues. These factors point to potential liquidity concerns.40
Negative
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.18B | 13.84B | 13.12B | 14.16B | 13.22B | 10.94B |
| Gross Profit | 1.79B | 2.93B | 3.25B | 1.15B | 1.09B | 1.49B |
| EBITDA | 1.54B | 1.00B | 2.06B | 1.50B | 2.11B | -1.73B |
| Net Income | -102.72M | -98.00M | 711.00M | -1.26B | 860.00M | -2.06B |
Balance Sheet | ||||||
| Total Assets | 15.76B | 16.20B | 15.66B | 15.24B | 19.27B | 15.45B |
| Cash, Cash Equivalents and Short-Term Investments | 306.70M | 332.00M | 971.00M | 376.00M | 341.00M | 370.00M |
| Total Debt | 5.48B | 3.31B | 2.73B | 2.88B | 2.88B | 3.19B |
| Total Liabilities | 11.03B | 11.35B | 10.23B | 10.12B | 12.75B | 9.95B |
| Stockholders Equity | 4.73B | 4.86B | 5.43B | 5.12B | 6.52B | 5.50B |
Cash Flow | ||||||
| Free Cash Flow | -267.46M | -284.00M | 1.40B | 288.00M | 591.00M | 555.00M |
| Operating Cash Flow | 920.02M | 841.00M | 2.24B | 912.00M | 1.23B | 1.25B |
| Investing Cash Flow | -1.42B | -1.56B | -926.00M | -729.00M | -885.00M | -937.00M |
| Financing Cash Flow | 549.31M | 99.00M | -530.00M | -159.00M | -303.00M | -366.00M |
AGL Energy Technical Analysis
Neutral
6.13
Price Trends
6.42
Negative
6.18
Positive
6.02
Positive
Market Momentum
-0.03
Positive
42.13
Neutral
7.86
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AGLXY, the sentiment is Neutral. The current price of 6.13 is below the 20-day moving average (MA) of 6.88, below the 50-day MA of 6.42, and above the 200-day MA of 6.02, indicating a neutral trend. The MACD of -0.03 indicates Positive momentum. The RSI at 42.13 is Neutral, neither overbought nor oversold. The STOCH value of 7.86 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AGLXY.
AGL Energy Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $7.80B | 6.77 | 12.21% | 3.92% | 1.10% | 140.04% | |
64 Neutral | $4.17B | 22.16 | ― | 4.09% | 4.90% | -4.42% | |
62 Neutral | $54.58B | 58.07 | 18.91% | 0.56% | 42.77% | -47.64% | |
60 Neutral | $32.66B | 35.94 | 39.65% | 1.11% | 6.40% | 62.12% | |
55 Neutral | $4.32B | 17.34 | -2.11% | 5.02% | 4.67% | -112.83% |
* Utilities Sector Average
AGLXY
AGL Energy
6.41
-0.13
-1.97%
NWE
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NRG
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63.05%
UGI
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36.32
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VST
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161.99
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30.87%
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.