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The AES Corporation (NYSE:AES): Immense Growth Potential?

Simply Wall St

Since The AES Corporation (NYSE:AES) released its earnings in December 2018, the consensus outlook from analysts appear fairly confident, as a -12% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -18%. Presently, with latest-twelve-month earnings at US$985m, we should see this growing to US$871m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

Check out our latest analysis for AES

How is AES going to perform in the near future?

The longer term expectations from the 9 analysts of AES is tilted towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:AES Past and Future Earnings, April 15th 2019

From the current net income level of US$985m and the final forecast of US$1.0b by 2022, the annual rate of growth for AES’s earnings is 3.1%. EPS reaches $1.57 in the final year of forecast compared to the current $1.49 EPS today. Margins are currently sitting at 9.2%, approximately the same as previous years. With analysts forecasting revenue growth of 0.06097 and AES's net income growth expected to roughly track that, this company may add value for shareholders over time.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For AES, there are three essential factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is AES worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AES is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AES? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.