With a market cap of $9.3 billion, The AES Corporation (AES) is a prominent diversified power generation and utility company operating both in the United States and internationally. With a generation portfolio of approximately 34,596 megawatts, it serves around 2.6 million customers across various sectors, including residential, commercial, industrial, and governmental.
Companies valued at less than $10 billion are generally considered “small-cap” stocks, and AES Corporation fits this criterion perfectly. The company uses a mix of fuels and technologies, including coal, gas, hydro, wind, solar, and biomass, to sustainably generate electricity. Based in Arlington, Virginia, AES is committed to leading sustainable power solutions and driving economic growth through reliable and affordable energy.
Despite that, the power company has experienced a 42.2% decline from its 52-week high of $22.21 reached in May. AES’ shares have decreased 34.6% over the past three months, underperforming the 2.7% rise seen in the broader Dow Jones Industrials Average ($DOWI) during the same period.
Longer term, AES is down 32.1% over the past six months, lagging behind DOWI’s 10.7% gain. Moreover, shares of AES have dipped 33.7% over the past 52 weeks, compared to DOWI’s 15.4% return over the same time frame.
AES has shown a bearish pattern, trading below both its 50-day and 200-day moving averages since early October.
Despite reporting better-than-expected Q3 adjusted EPS of $0.71 on Oct. 31, shares of AES dipped 10.8% the next day due to a 4.2% year-over-year revenue decline to $3.3 billion, missing the consensus estimate. The lower non-regulated revenues and a sharp 21.4% drop in operating income raised alarms about underlying profitability challenges. Additionally, rising interest expenses, up 16.3%, and an increase in non-recourse debt to $19.7 billion fueled fears of mounting financial pressures in a high-interest rate environment. Investor sentiment may also have been dampened by weaker cash flows from operating activities, which fell significantly year-over-year.
The stock’s rival, Ameren Corporation (AEE), has outperformed AES with a 26.4% increase over the past 52 weeks and a gain of 29.3% over the past six months.
Despite its weak price action over the past year, AES has a consensus “Moderate Buy” rating from the 13 analysts covering the stock. As of writing, AES is trading below the mean price target of $18.58.
On the date of publication, Sohini Mondal 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. For more information please view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
