Core Viewpoint - AES Corporation's shares have declined by 41% over the past year, significantly underperforming its industry and sector, as well as the broader S&P 500 index [1][2]. Performance Comparison - Other industry players, such as CenterPoint Energy and Consolidated Edison, have shown positive stock performance, with increases of 22.8% and 2.4% respectively over the same period [2]. Reasons Behind Downtrend - AES's poor performance is attributed to disappointing first-quarter 2025 results, with earnings and revenues missing Zacks Consensus Estimates by 27% and 8.7% respectively, alongside year-over-year declines [4]. - As of March 31, 2025, AES had a long-term debt of $26.41 billion and current debt of $4.18 billion, with cash equivalents of only $2.55 billion, indicating a weak solvency position [5]. - Jefferies downgraded AES's stock rating from Buy to Hold in April 2025, citing a weaker balance sheet as a primary concern [6]. Potential for Rebound - The growing adoption of renewable energy presents opportunities for AES, which completed 643 megawatts of solar and energy storage projects in Q1 2025 and plans to add 3.2 gigawatts of new renewables by year-end 2025 [7][10]. - AES is actively retiring coal-fired units to reduce carbon emissions and is pursuing growth in the liquefied natural gas market through long-term contracts [8]. Earnings Estimates - The Zacks Consensus Estimate for AES's earnings per share for 2025 and 2026 has increased by 4.83% and 3.20% respectively over the past 60 days, indicating growing analyst confidence [11]. - Revenue estimates for 2025 and 2026 are projected at $12.74 billion and $13.35 billion, reflecting year-over-year growth of 3.8% and 4.8% [12]. Valuation - AES shares are trading at a forward Price/Earnings (P/E) ratio of 5.70X, significantly lower than the industry average of 14.62X, suggesting a relative discount [14].

Investors with an interest in Utility - Electric Power stocks have likely encountered both AES (AES) and NRG Energy (NRG) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while o ...

Group 1: Market Overview - Stocks experienced volatility as the Federal Reserve maintained interest rates in the range of 4.25-4.5% during its May FOMC meeting, amid high inflation and economic uncertainty due to tariffs [1][4] - The U.S. economy contracted by 0.3% in Q1 2025, contrary to expectations of a 0.4% growth, raising recession fears [7] Group 2: Investment Recommendations - Defensive stocks, particularly in the utilities sector, are recommended for investment, including The AES Corporation, DTE Energy Company, Atmos Energy Corporation, and American Water Works Company, all carrying a Zacks Rank 2 (Buy) [2][3] - These stocks are characterized as low-beta (beta < 1) with high dividend yields, making them attractive during market volatility [3] Group 3: Company Profiles - **The AES Corporation**: A global power company with operations in 14 countries, expected earnings growth rate of 1.4%, Zacks Rank 2, beta of 0.94, and a dividend yield of 6.74% [8][9] - **DTE Energy Company**: A diversified energy company with an expected earnings growth rate of 6%, Zacks Rank 2, beta of 0.47, and a dividend yield of 3.17% [10] - **Atmos Energy Corporation**: Engaged in regulated natural gas distribution, with an expected earnings growth rate of 5.3%, Zacks Rank 2, beta of 0.74, and a dividend yield of 2.15% [11][12] - **American Water Works Company**: Provides water services to over 14 million customers, with an expected earnings growth rate of 6.1%, Zacks Rank 2, beta of 0.73, and a dividend yield of 2.08% [13][14]

AES (AES) closed the last trading session at $10.44, gaining 2.1% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $14.27 indicates a 36.7% upside potential. According to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that ...

Group 1 - The "Rose's Income Garden" portfolio consists of 83 investments across all sectors, with 10 specifically in the utility sector, highlighting the defensive nature of utilities as safe quality income investments [1] - The "Macro Trading Factory" service is macro-driven and managed by a team of experienced investment managers, focusing on providing investment solutions [1][2] - The service offers two portfolios, "Funds Macro Portfolio" and "Rose's Income Garden," both designed to outperform the SPY on a risk-adjusted basis, catering to investors with limited time or knowledge [2] Group 2 - The portfolios are structured to provide a hassle-free and easy-to-understand investment solution, appealing to those seeking market exposure in a less volatile manner [2] - The emphasis on utilities within the "Rose's Income Garden" portfolio underscores the importance of power as a necessary resource for investment stability [1]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $591 million for Q1 2025, a decrease from $640 million in the same quarter last year, which was anticipated due to prior year revenues from the accelerated monetization of the Warrior Run PPA and the sale of AES Brazil [22][23] - Adjusted EPS for the quarter was $0.27, down from $0.50 year-over-year, also in line with expectations [23] Business Line Data and Key Metrics Changes - The Renewables segment saw a 45% year-over-year increase in EBITDA, driven by contributions from new projects and the inclusion of renewables in Chile, previously part of the Energy Infrastructure segment [24][25] - The Utilities segment experienced higher adjusted PTC, primarily due to tax attributes from the Pike County Energy Storage Project and new rates implemented in Indiana [26] Market Data and Key Metrics Changes - The company has a backlog of 11.7 gigawatts, with significant contributions expected from new projects, including a 1 gigawatt solar plus storage project contracted with Amazon [6][9] - The company is well-positioned against potential tariff impacts, with 80% of its backlog scheduled to come online between 2025 and 2027 having zero exposure to tariffs [10][11] Company Strategy and Development Direction - The company reaffirmed its 2025 guidance and long-term growth rate targets, emphasizing a focus on long-term contracted generation and growth in U.S. regulated utilities [5][33] - The company is executing the largest investment program in the history of AES Indiana and AES Ohio, with plans to invest approximately $1.4 billion this year [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, highlighting that two-thirds of EBITDA comes from long-term contracted generation, which is not tied to underlying demand conditions [17][32] - The company anticipates strong demand from corporate customers, particularly data centers, and expects to meet its financial metrics despite economic uncertainties [7][33] Other Important Information - The company achieved its asset sale proceeds target for the year with the sale of a minority stake in its global insurance company for $450 million [6][18] - The company has successfully completed all financings needed to address its 2025 debt maturities and has hedged 100% of its benchmark interest rate exposure through 2027 [31] Q&A Session Summary Question: Impact of the insurance transaction on EBITDA - Management expects the EBITDA impact from the insurance transaction to be in the range of $25 million to $30 million, viewing it as a low-cost equity financing that supports growth [40][41] Question: Clarification on tariff exposure - Management clarified that the majority of tariff exposure is limited to a small quantity of batteries imported from Korea, with active measures in place to mitigate this exposure [48][50] Question: Status of asset sale targets - The company is close to achieving its $3.5 billion asset sale target, with ongoing discussions about potential sales in its thermal portfolio and other assets [93][96] Question: Renewable demand trends - Management noted continued strong demand from data center customers, with no significant pull forward in contracts due to potential IRA changes [71][73] Question: Future plans for AES Ohio - The recent legislation is seen as net positive for AES Ohio, allowing for a more constructive regulatory framework and eliminating regulatory lags [120]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $591 million for Q1 2025, down from $640 million in the same quarter last year, which was anticipated due to prior year revenues from the accelerated monetization of the Warrior Run PPA and the sale of AES Brazil [22][23] - Adjusted EPS for the quarter was $0.27 compared to $0.50 last year, also in line with expectations [23] Business Line Data and Key Metrics Changes - The Renewables segment saw a 45% year-over-year increase in EBITDA, driven by contributions from new projects and the inclusion of renewables in Chile, previously part of the Energy Infrastructure segment [24][25] - The Utilities segment experienced higher adjusted PTC due to tax attributes from the Pike County Energy Storage Project, new rates in Indiana, demand growth, and favorable weather [26] Market Data and Key Metrics Changes - The company has a backlog of 11.7 gigawatts, with significant contributions expected from new projects, including a 1 gigawatt solar plus storage project contracted with Amazon [6][9] - The company is positioned to benefit from strong demand for renewables, particularly from data center customers, with agreements for 9.5 gigawatts signed [13][14] Company Strategy and Development Direction - The company reaffirmed its 2025 guidance and long-term growth rate targets, emphasizing resilience against economic uncertainties and tariff impacts [5][7] - The strategy includes a focus on long-term contracted generation and growth in U.S. regulated utilities, with a significant investment program planned for AES Indiana and AES Ohio [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, highlighting that two-thirds of EBITDA comes from long-term contracted generation, which is not tied to underlying demand conditions [17] - The company expects to achieve its financial metrics for the year, with clear visibility into future performance despite potential economic challenges [7][32] Other Important Information - The company completed the sale of a minority stake in its global insurance company for $450 million, achieving its asset sale proceeds target for the year [6][28] - The company has successfully hedged 100% of its benchmark interest rate exposure for all corporate financings through 2027 [31] Q&A Session Summary Question: Impact of the insurance transaction on EBITDA - Management expects the EBITDA impact from the insurance transaction to be in the range of $25 million to $30 million, which is considered very accretive [40] Question: Clarification on tariff exposure - Management clarified that the tariff exposure is minimal, with most equipment already secured domestically or imported prior to tariff imposition [47][49] Question: Renewable demand trends - Management noted continued strong demand from data center customers without any pull forward due to potential IRA changes [70] Question: Status on asset sale targets - The company is close to achieving its $3.5 billion asset sale target, with ongoing discussions for additional sales in its thermal portfolio and other assets [90][93] Question: Future of transferability in financing - Management indicated that even without transferability, the company can still monetize tax value through tax equity partnerships, maintaining a strong cash and credit profile [81][82]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $591 million, down from $640 million in the previous year, primarily due to prior year revenues from the accelerated monetization of the Warrior Run PPA and the sale of AES Brazil [23][24] - Adjusted EPS for the quarter was $0.27 compared to $0.50 last year, in line with expectations [24] - The company reaffirmed its 2025 adjusted EBITDA guidance of $2.65 billion to $2.85 billion and adjusted EPS guidance of $2.10 to $2.26 [28] Business Line Data and Key Metrics Changes - The Renewables segment saw a 45% year-over-year increase in EBITDA, driven by contributions from new projects and the inclusion of renewables in Chile [25] - The Utilities segment's higher adjusted PTC was driven by tax attributes from the Pike County Energy Storage Project, new rates in Indiana, demand growth, and favorable weather [27] - Lower EBITDA in the Energy Infrastructure segment was attributed to prior year revenues from the Warrior Run plant and the transition of Chile Renewables to the Renewables segment [27] Market Data and Key Metrics Changes - The company has a backlog of 11.7 gigawatts, with significant demand from corporate customers, particularly data centers [4][13] - The U.S. supply chain strategy protects against tariffs and inflation, with nearly all CapEx for projects scheduled to come online between 2025 and 2027 secured [10][12] Company Strategy and Development Direction - The company is focused on long-term contracted generation and growth in U.S. regulated utilities, with a robust growth program in place [6][18] - The strategy includes a significant investment program in AES Indiana and AES Ohio, with approximately $1.4 billion planned for 2025 [19] - The company aims to maintain control of its captive insurance business while utilizing asset sales to support growth capital for renewables and utilities [29][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model against economic uncertainties, including tariffs and potential recessions [6][34] - The demand from core corporate customers remains strong, with no signs of slowdown in energy needs from hyperscalers [34][67] - The company is optimistic about the future, expecting significant growth driven by projects already online and cost reduction actions [33] Other Important Information - The company completed the sale of a minority stake in its global insurance company for $450 million, achieving its asset sale target for the year [5][29] - The company has hedged 100% of its benchmark interest rate exposure for all corporate financings through 2027 [32] Q&A Session Summary Question: Impact of the insurance transaction on EBITDA - The expected EBITDA impact from the insurance transaction is in the range of $25 million to $30 million, viewed as a low-cost equity financing [39][40] Question: Clarification on tariff exposure - The company has minimized tariff exposure through strategic partnerships and domestic supply, with only a small potential exposure related to batteries imported from Korea [46][48] Question: Renewable demand trends - There is continued strong demand from data center customers, with no pull forward observed due to potential IRA changes [67] Question: Status on asset sale targets - The company is close to achieving its $3.5 billion asset sale target, with ongoing discussions for additional sales [88][91] Question: Regulatory changes in Ohio - Recent legislation is seen as net positive for AES Ohio, providing a more constructive regulatory framework for rate filings [115][116]

Core Viewpoint - The AES Corporation reported a significant decline in adjusted earnings and total revenues for the first quarter of 2025, primarily due to lower contributions from its Energy Infrastructure segment and changes in tax attributes [1][3]. Financial Performance - Adjusted earnings for Q1 2025 were 27 cents per share, missing the Zacks Consensus Estimate of 37 cents by 27% and down 46% from 50 cents per share in the same quarter last year [1]. - GAAP earnings were reported at 7 cents per share, a decrease from 60 cents in Q1 2024, attributed to lower contributions from the Energy Infrastructure segment and one-time restructuring costs [2]. - Total revenues amounted to $2.93 billion, a 5.3% decline year-over-year, and missed the Zacks Consensus Estimate of $3.20 billion by 8.7% [3]. Cost and Income Analysis - Total cost of sales for the quarter was $2.49 billion, reflecting a 0.8% increase year-over-year [4]. - Operating income decreased to $441 million, down 28.8% from $619 million in the prior year [4]. - Interest expenses were $342 million, down 4.2% from $357 million in the same quarter last year [4]. Operational Highlights - The company signed 443 megawatts (MW) of new long-term power-purchase agreements (PPAs) for solar and energy storage, increasing the total backlog to 11.7 gigawatts (GW), with 5.3 GW currently under construction [5]. Financial Condition - Cash and cash equivalents stood at $1.75 billion as of March 31, 2025, up from $1.52 billion at the end of 2024 [6]. - Non-recourse debt increased to $21.61 billion from $20.63 billion as of December 31, 2024 [6]. - Net cash flow from operating activities was $545 million in Q1 2025, compared to $287 million in Q1 2024 [6]. Capital Expenditure - Total capital expenditure for the first quarter was $1.25 billion, down from $2.15 billion recorded a year ago [7]. Future Guidance - AES reaffirmed its 2025 earnings guidance, expecting adjusted earnings in the range of $2.10-$2.26 per share, with the Zacks Consensus Estimate at $2.16 per share [8]. - The company maintains an average annual earnings growth target of 7-9% through 2027 [8].

Financial Performance - The company's Adjusted EBITDA for Q1 2025 was $591 million, a decrease of $49 million compared to $640 million in Q1 2024[11, 47] - Adjusted EPS for Q1 2025 was $0.27, a decrease of $0.23 compared to Q1 2024[11, 49] - Renewables Adjusted EBITDA increased by $50 million, from $111 million in Q1 2024 to $161 million in Q1 2025[52] - Utilities Adjusted PTC increased by $80 million, from $41 million in Q1 2024 to $121 million in Q1 2025[56] - Energy Infrastructure Adjusted EBITDA decreased by $102 million, from $356 million in Q1 2024 to $254 million in Q1 2025[59] Strategic Highlights & Growth - The company signed or was awarded 443 MW of new PPAs for renewables, bringing the backlog to 11.7 GW[12] - Construction of 643 MW of renewables projects was completed, with the remaining 2.6 GW of projects under construction for 2025 being approximately 80% complete[12, 17] - The company achieved its 2025 asset sale proceeds target by selling a minority stake in AGIC for $450 million[12] - The company is on track to invest approximately $1.4 billion across AES Indiana & AES Ohio in 2025[39] Financial Outlook & Capital Allocation - The company reaffirms its 2025 Adjusted EBITDA guidance of $2,650-$2,850 million[9, 66] - The company reaffirms its 2025 Adjusted EPS guidance of $2.10-$2.26[9, 68] - The company expects to generate Parent Free Cash Flow of $1,150-$1,250 million in 2025[71, 112]