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Here's Why You Should Add AES Corp Stock to Your Portfolio

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The AES Corporation’s AES withdrawal of operations from risky markets as well as growing partnerships and focus on renewables should act as a growth catalyst.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) utility company a promising pick for investors.

Focus on Cost Reduction

AES Corp is focused on maintaining financial flexibility by undertaking cost-reduction initiatives —including overhead reductions, efficiency procurement and operational improvements. Since 2012, the company has achieved $300 million in cost savings and revenue enhancements. In 2019, it announced an additional annual cost-saving target worth $100 million by 2022, driven by digital initiatives.

Growth Projections

The Zacks Consensus Estimate for the company’s 2019 earnings per share is pegged at $1.34 on revenues of $10.74 billion. The bottom and top lines are expected to rise year over year, which indicate increases of 8.06% and 0.08%, respectively, from the year-ago reported figures.

The consensus mark for 2020 earnings is pegged at $1.47 per share on revenues of $11.05 billion. While the bottom-line estimate suggests a 9.70% year-over-year increase, that for the top line implies a 2.87% improvement.

The company’s long-term (three to five years) earnings growth is pegged at 8.50%.

Price Performance

In the past year, shares of AES Corp have gained 35.3% compared with the industry’s growth of 14.8%.

 


Dividend Yield & Return on Equity (ROE)

The company rewards its shareholders through dividend payments. Its current dividend yield is 2.85%, higher than the S&P 500’s average of 1.8%.

AES Corp has an ROE of 22.67%, higher than the industry’s average of 9.47% and Zacks S&P 500 composite’s 17.10%. This indicates that the company is efficient in utilizing shareholders’ funds.

Other Stocks to Consider

Some other top-ranked stocks in the sector are FirstEnergy Corporation FE, NorthWestern Corporation NWE and MDU Resources Group, Inc MDU. All the stocks currently have a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FirstEnergy, NorthWestern and MDU Resources delivered a positive earnings surprise of 2.87%, 10.49% and 2.79%, on average, respectively, in the last four quarters.

Long-term earnings growth rate for FirstEnergy, NorthWestern and MDU Resources is pegged at 6%, 2.80% and 7.10%, respectively.

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The AES Corporation (AES) : Free Stock Analysis Report
 
FirstEnergy Corporation (FE) : Free Stock Analysis Report
 
NorthWestern Corporation (NWE) : Free Stock Analysis Report
 
MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
 
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