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Should You Investigate The AES Corporation (NYSE:AES) At US$23.87?

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The AES Corporation (NYSE:AES) saw significant share price movement during recent months on the NYSE, rising to highs of US$26.53 and falling to the lows of US$23.57. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether AES' current trading price of US$23.87 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AES’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for AES

Is AES still cheap?

Good news, investors! AES is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $39.33, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. AES’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of AES look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted revenue growth of 8.8% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for AES, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since AES is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on AES for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy AES. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, AES has 2 warning signs (and 1 which is potentially serious) we think you should know about.

If you are no longer interested in AES, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.