AES Corporation Prepares for Q4 Earnings Report Amidst Market Challenges
Valued at a market cap of $8.4 billion, The AES Corporation (AES) stands as a key player in global energy, focusing on diversified power generation and utility services. Headquartered in Arlington, Virginia, AES utilizes both thermal and renewable energy sources to deliver reliable, affordable, and sustainable electricity. With a robust portfolio of 34,596 megawatts, the company meets the energy needs of residential, commercial, and industrial customers around the world.
Upcoming Earnings and Analyst Expectations
On Monday, Feb. 24, AES is set to release its fiscal Q4 earnings. Analysts predict that the company will report a profit of $0.47 per share, representing a 35.6% decline from $0.73 per share in the same quarter last year. That said, AES has consistently exceeded Wall Street’s earnings expectations in the past four quarters. In its last reported quarter, AES outperformed the consensus estimate by 18.3%.
Looking ahead to fiscal 2024, projections show that analysts expect AES to achieve an EPS of $1.95, up 10.8% from $1.76 in fiscal 2023.
Stock Performance and Market Comparisons
AES’ shares have dipped 31.2% over the past 52 weeks, significantly lagging behind both the S&P 500 Index’s ($SPX) 25.5% gain and the Utilities Select Sector SPDR Fund’s (XLU) 30.9% increase during this time frame.
Recent Earnings Result and Investor Concerns
On Oct. 31, despite reporting better-than-expected Q3 adjusted EPS of $0.71, AES shares fell 10.8% the following day. This downturn came as investors reacted to a 4.1% decline in year-over-year revenue, which fell to $3.3 billion, indicating weaker performance in its energy infrastructure unit. Additionally, operating income decreased by 21.4% to $722 million, while interest expenses rose by 16.3% to $379 million, reflecting rising cost pressures. Concerns surrounding profitability have emerged due to potential difficulties in managing a considerable 12.7 GW backlog of power purchase agreements amid escalating interest rates and supply chain issues.
Analyst Sentiment Towards AES Stock
Despite the challenges, analysts maintain a cautiously optimistic outlook on AES stock, giving it a “Moderate Buy” rating overall. Among 13 analysts following the stock, recommendations include eight “Strong Buys,” one “Moderate Buy,” three “Holds,” and one “Moderate Sell.” Currently, AES is trading below the average analyst price target of $17.75.
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 are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
