The AES Corporation

🇺🇸New York Stock Exchange
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The AES Corporation stock analysis AES overview
Slightly Bullish +25

Is AES (AES) Offering Value After Recent 30-Day Share Price Slide?

📉 AES shares closed at US$14.10, representing a 13.4% decline over the last 30 days following a 14.2% one-year return.

⚡ Recent market sentiment is influenced by AES's status as a regulated utility and renewable energy participant involved in power generation and grid reliability.

📊 The stock holds a valuation score of 5 out of 6 based on multiple analysis methods used to determine its fair value.

💰 A Discounted Cash Flow (DCF) model projects intrinsic value at approximately US$19.75, suggesting the current price is about 28.6% undervalued.

📈 Free cash flow was a loss of roughly US$2.6 billion in the latest twelve months but is projected to reach US$1,275 million by 2026.

🔍 AES currently trades on a P/E ratio of 10.70x, which is significantly below the Renewable Energy industry average of 16.43x and the peer group average of 40.58x.

📉 Simply Wall St calculates a proprietary "Fair Ratio" of 27.13x for AES, indicating significant undervaluation compared to its current trading multiple.

🧠 Investor narratives suggest a wide range of fair value estimates, from US$7.17 to US$21.95, depending on specific revenue and earnings assumptions.

💼 The consensus analyst view values the stock at approximately US$15.33, implying current pricing is roughly 8.0% below their estimated fair value.

⚠️ Analysts note key risks including reliance on tax credits, large capital needs, supply chain issues, and exposure to remaining fossil fuel assets.

Bullish Signals
  • Simply Wall St's Discounted Cash Flow model estimates AES is undervalued by 28.6%, with an intrinsic value of US$19.75 compared to the recent share price of US$14.10.
  • A proprietary 'Fair Ratio' analysis indicates AES appears significantly undervalued, trading at a P/E of 10.70x versus a calculated Fair Ratio of 27.13x.
  • Analyst consensus projects substantial future cash flows, estimating free cash flow will reach US$1,275 million in 2026 and US$1,375 million in 2028.
  • One community narrative suggests AES is trading around 8.0% below its fair value, implying positive upside potential based on revenue growth of 3.77%.
  • Despite a recent 14.2% decline over the last month, the stock still delivered a positive 14.2% return over the last year.
  • AES maintains an established dividend and strong institutional ownership, which are viewed as positive factors even within community narratives.
Risk Factors
  • AES's one-year return of 14.2% lags behind its peers, signaling weaker performance relative to competitors.
  • The company reported a twelve-month free cash flow loss of approximately US$2.6 billion, relying heavily on future estimates rather than current cash generation.
  • Analyst projections for free cash flow extend to 2035, indicating significant uncertainty in long-term cash flow stability.
  • AES trades at a P/E ratio of 10.70x, which is below the Renewable Energy industry average of roughly 16.43x and significantly below its peer group average of 40.58x, suggesting market skepticism about growth prospects or profitability quality.
  • Key watchpoints include reliance on tax credits, large capital needs, supply chain risks, and remaining fossil assets which could introduce downside volatility.
  • The share price has declined 13.4% over the last 30 days, reflecting shifting sentiment and changing risk perceptions among investors.
Full Analysis
AES Corporation (AES) recently closed at US$14.10 per share, reflecting a 14.2% return over the last year but experiencing a 13.4% decline over the past 30 days, suggesting shifting market sentiment regarding this regulated utility and renewable energy participant. Simply Wall St analysis assigns AES a valuation score of 5 out of 6 and utilizes a Discounted Cash Flow (DCF) model to project an intrinsic value of approximately US$19.75 per share, based on assumptions that include a projected shift from a recent twelve-month free cash flow loss of about US$2.6 billion to US$1,275 million in 2026 and US$1,375 million in 2028. Under these DCF calculations, the current share price appears undervalued by roughly 28.6% compared to the estimated fair value. In addition to cash flow analysis, AES currently trades at a Price-to-Earnings (P/E) ratio of approximately 10.70x, which is significantly lower than the Renewable Energy industry average of roughly 16.43x and the broader peer group average of about 40.58x. Simply Wall St calculates a proprietary "Fair Ratio" of 27.13x for AES, which incorporates factors such as earnings growth, profit margins, and specific company risks; when compared to the current trading multiple, this metric indicates that AES appears undervalued on a price-to-earnings basis as well. However, analysts highlight that key watchpoints include reliance on tax credits, large capital needs, supply chain risks, and remaining fossil fuel assets, leading some consensus models to suggest the stock is broadly fairly priced around recent levels based on revenue projections of about US$12.0 billion and earnings of roughly US$1.7 billion. The article also presents divergent community narratives regarding AES's fair value that illustrate varying investor assumptions. One narrative suggests a fair value close to US$15.33, derived from a future P/E expectation of 8.0x and a discount rate of 12.3%, implying the stock is priced around 8.0% below this specific valuation view. Conversely, another community perspective estimates a much lower fair value of US$7.17, which would imply that AES currently trades approximately 97.0% above its fair value under those specific assumptions. While both narratives acknowledge positives such as an established dividend and institutional ownership, they diverge significantly on future revenue growth, with one model using a 3.77% growth rate and another at 4.05%, demonstrating how different forecasts can lead to starkly different valuations for the same company.