Latest news with #AESCorporation
Yahoo
7 days ago
- Business
- Yahoo
The Most Important Thing for AES Investors to Watch in 2025
Key Points While it's true that it takes money to make money, this mindset must be paired with discipline. AES is servicing an unusually high amount of debt compared to the majority of its peers and similar companies. Years of aggressive borrowing and spending decisions are now coming to a head. 10 stocks we like better than The AES Corporation › With nothing more than a passing glance, the stock looks like a solid buy. Shares are priced at less than 8 times their 12-month earnings, while their forward-looking dividend yield stands at 6.6%. Its revenue and dividend payments have also been firmly -- even if not explosively -- growing for years now, thanks to one of the world's most reliable recent growth drivers. That's the ever-rising need for energy, and in particular, demand driven by the proliferation of power-hungry data centers. And yet, shares of electricity wholesaler AES Corporation (NYSE: AES) continue their erratic bearish trek, reaching a new multiyear low in May of this year to now stand at less than half their late-2022 peak value. Not even recent chatter of an acquisition did much to turn this trend around. What gives? The market's just pricing in the company's biggest risk -- one that may force AES's proverbial hand sooner than later. Indeed, it could start to happen by the end of this year. Fortunately, it's not something ambiguous or arbitrary. Investors will be able to see it happening on the company's balance sheet, and even in news headlines. But first things first. What's AES Corporation? AES generates electricity. It's not a utility company per se, however. It sells most of what it produces to actual utility providers, or increasingly, directly to institutional-level users like Microsoft and Meta Platforms that need massive amounts of cost-effective electricity for their artificial intelligence (AI) data centers. The majority of its power comes from renewable energy sources too, satisfying current societal preferences, and future regulatory requirements. The company wasn't built from the ground up to be an ultra-modern energy provider, though. Twenty years ago, AES made its foray into the wind energy arena with a company called SeaWest, kicking off what would be a major paradigm shift toward an all-renewables portfolio. Last year, it did $12.3 billion worth of business, turning $700 million of it into net income. Not bad. The only problem? The company took on an uncomfortable amount of debt in its effort to get out in front of the shift to green energy. As of the most recent look, AES is servicing over $30 billion in long-term obligations (versus a market cap of just under $10 billion) that are costing it on the order of $1.4 billion in interest payments per year. Its relative debt load is one of the very highest in the utilities industry, in fact. That's why most investors continue to balk at this seemingly bargain-priced stock -- the capitalization situation as it stands isn't indefinitely sustainable. A strategy with no margin for error Don't panic if you're a fan, follower, or shareholder: The aggressive, capital-intensive strategy has mostly been working. The company has not only remained profitable since turning up the heat in 2022, but has (again, mostly) managed to grow its bottom line in step with revenue. Buying growth by acquiring existing, operational companies rather than producing growth organically, however, isn't cheap. Although price tags for its purchases are rarely disclosed, there's usually a premium price for a proven project. Perhaps the bigger concern here, though, is the fact that AES is now shedding existing assets and stakes as a means of curbing costs and coming up with some cash before much of its outstanding debt comes due. Last year, for instance, it opted to sell its 47% stake in renewable energy producer AES Brasil to utility company Auren Energia. Later last year, it sold a 30% stake in AES Ohio to investment group CDPQ. Such fundraising isn't damning in and of itself, to be clear. AES can refinance or even cover its immediately maturing debt well enough. But these actions are out of character for this particular company, which had been aggressively acquiring similar assets. It's a subtle sign that management may be worried about liquidity, or is starting to worry that its projects aren't producing quite enough cash flow compared to their cost. In this vein, after years of growth, the company's rolling backlog of power purchase agreements it's expected to satisfy appears to have stagnated, sliding from last year's peak of 12.7 gigawatts to only 11.7 gigawatts as of the first quarter of 2025. What to watch So what exactly is it that investors need to watch with AES for the remainder of this year? Two (related) things. On a qualitative basis, you'll want to see the company improve its capitalization situation rather than allow it to deteriorate. And this progress could manifest in more than one way. AES may start seeing more cash flow from projects that have already been paid for, as an example, but it could also simply sell existing assets at a good price and pay down its debt. One could even make the argument that the company might be able to invest in new projects and properties that produce an immediately strong return on the investment. Just remember: Like buying and selling houses, cars, and even stocks, acquisitions tend to cost a little more than they seemingly should, while divestitures never quite fetch the price you'd like. Quantitatively, you don't want to see The AES Corporation's credit rating worsen. It's not terrible right now, for the record. Fitch Ratings currently rates the company's unsecured bonds at BBB-. That's still considered healthy enough, but it's the lowest-possible score that's still considered investment grade. Any worse, and AES's debt moves into the so-called "junk" category that makes it more difficult (as well as more expensive) to refinance existing and/or maturing debt. This isn't a prediction, though. It's just a possibility to acknowledge. With all that being said, perhaps the best-possible outcome for this stock from here is the recently rumored buyout coming to fruition. Although the buyer might be taking on a great deal of debt for not a lot of revenue-bearing assets, to the right suitor with deep-enough pockets, AES's scale and presence within the renewables arena might be worth it. Navigating its own debt reduction and asset optimization, conversely, could prove difficult, continuing to weigh on the stock. Just bear in mind that the acquisition rumor is just that -- a rumor. That alone is no reason to own any stock. Should you buy stock in The AES Corporation right now? Before you buy stock in The AES Corporation, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and The AES Corporation wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,477!* Now, it's worth noting Stock Advisor's total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The Most Important Thing for AES Investors to Watch in 2025 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22-07-2025
- Business
- Yahoo
AES Corporation's Q2 2025 Earnings: What to Expect
The AES Corporation (AES) is a global energy company headquartered in Arlington, Virginia, operating in over 15 countries. Boasting a market cap of $9.5 billion, AES manages a diverse energy portfolio that includes regulated utilities, renewable power, advanced energy storage, and thermal generation. The company is widely recognized as a leader in battery-based storage solutions and ranks among the world's top solar developers, playing a key role in accelerating the global transition to clean, reliable energy. The energy titan is set to announce its fiscal Q2 earnings after the market closes on Thursday, July 31. Ahead of this event, analysts expect this utility company to report a profit of $0.47 per share, up 23.7% from $0.38 per share in the year-ago quarter. The company has surpassed Wall Street's earnings estimates in three of the last four quarters, while missing in the previous quarter. More News from Barchart This Penny Stock Wants to Become the MicroStrategy of Dogecoin Opendoor Stock Is Surging Higher in a Frenzied Retail Rally. How Should You Play OPEN Shares Here? Robinhood Stock Stumbles as S&P 500 Inclusion Is Once Again Off the Table for HOOD Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! For fiscal 2025, analysts expect AES to report a profit of $2.15 per share, up marginally from $2.14 from fiscal 2024. Furthermore, its EPS is expected to grow 3.7% year over year to $2.23 in fiscal 2026. Shares of AES have declined 19.9% over the past 52 weeks, notably underperforming both the S&P 500 Index's ($SPX) 14.5% gain, and the Utilities Select Sector SPDR Fund's (XLU) 19.8% rise over the same time frame. On July 9, shares of AES surged nearly 20%, making it the top gainer in the S&P 500, following reports of strong private equity interest in acquiring the company. Firms like Brookfield Asset Management and BlackRock's Global Energy Partners are reportedly eyeing AES, attracted by its strategic position as a key clean-energy supplier to hyperscalers like Meta Platforms, Inc. (META), Microsoft Corporation (MSFT), and Inc. (AMZN). AES has reportedly signed contracts totaling 10.1 GW of renewable energy with these AI-driven data center operators. Wall Street analysts are moderately optimistic about AES' stock, with a "Moderate Buy" rating overall. Among 11 analysts covering the stock, six recommend "Strong Buy," three suggest 'Hold,' one gives a 'Moderate Sell,' and one advises a 'Strong Sell' rating. The mean price target for AES is $14, which indicates a 2.3% potential upside from the current price levels. On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-07-2025
- Business
- Yahoo
The AES Corporation (AES) Gains Amid Takeover Interest
The share price of The AES Corporation (NYSE:AES) surged by 9.29% between July 7 and July 11, 2025, putting it among the Energy Stocks that Gained the Most This Week. An executive in a power plant control booth overseeing the efficient energy production. The AES Corporation (NYSE:AES), together with its subsidiaries, operates as a power generation and utility company in the United States and internationally. The AES Corporation (NYSE:AES) soared this week following reports that the company is 'exploring its options, including a possible sale' to one or several 'large investment firms'. The energy firm's share price has fallen by more than 33% over the last year, attracting attention from investors such as Brookfield Asset Management Ltd and BlackRock Inc's Global Infrastructure Partners (GIP). The AES Corporation (NYSE:AES)'s renewable business has recently been hurt by President Trump's policies, including a rapid phaseout of clean energy credits as part of his sweeping tax and spending bill. While we acknowledge the potential of AES as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the . READ NEXT: 10 Best Nuclear Energy Stocks to Buy Right Now and The 5 Energy Stocks Billionaires are Quietly Piling Into. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-07-2025
- Business
- Yahoo
The AES Corporation (AES) Gains Amid Takeover Interest
The share price of The AES Corporation (NYSE:AES) surged by 9.29% between July 7 and July 11, 2025, putting it among the Energy Stocks that Gained the Most This Week. An executive in a power plant control booth overseeing the efficient energy production. The AES Corporation (NYSE:AES), together with its subsidiaries, operates as a power generation and utility company in the United States and internationally. The AES Corporation (NYSE:AES) soared this week following reports that the company is 'exploring its options, including a possible sale' to one or several 'large investment firms'. The energy firm's share price has fallen by more than 33% over the last year, attracting attention from investors such as Brookfield Asset Management Ltd and BlackRock Inc's Global Infrastructure Partners (GIP). The AES Corporation (NYSE:AES)'s renewable business has recently been hurt by President Trump's policies, including a rapid phaseout of clean energy credits as part of his sweeping tax and spending bill. While we acknowledge the potential of AES as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the . READ NEXT: 10 Best Nuclear Energy Stocks to Buy Right Now and The 5 Energy Stocks Billionaires are Quietly Piling Into. Disclosure: None.
Yahoo
10-07-2025
- Business
- Yahoo
AES Corp. (AES) Surges 19.8% on Potential Sale
The AES Corporation (NYSE:AES) is one of the . AES Corporation soared by 19.78 percent on Wednesday to close at $13.26 apiece as investors gobbled up shares following reports that it was exploring a sale. According to a report by Bloomberg, The AES Corporation (NYSE:AES) is mulling over selling the company after receiving takeover interests from large investment companies, namely BlackRock's (BLK) Global Infrastructure Partners unit and Brookfield Asset Management. The potential sale followed The AES Corporation's (NYSE:AES) loss of about half of its value over the past two years. An executive in a power plant control booth overseeing the efficient energy production. The power sector has seen a growing acquisition interest from large companies recently due to the increasing need for power to support the growing needs of the power-hungry Artificial Intelligence data centers. This year alone, Blackstone's infrastructure unit took over TXNM Energy, which provides electricity to New Mexico and Texas, for $11.5 billion through a combination of cash and debt. While we acknowledge the potential of AES as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
