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Why Is AES (AES) Down 1.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for AES (AES). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AES due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

AES Corp.’s Q2 Earnings and Revenues Surpass Estimates

The AES Corporation’s second-quarter 2021 adjusted earnings of 31 cents per share beat the Zacks Consensus Estimate of 29 cents by 6.9%. Earnings also improved 24% from the year-ago quarter’s 25 cents per share.

Including one-time adjustment, the company incurred GAAP earnings of 3 cents per share for the reported quarter against a loss of 13 cents in the prior-year period.

Total Revenues

AES Corp. generated total revenues of $2,700 million in the second quarter, up 21.8% year over year. The top line also surpassed the Zacks Consensus Estimate of $2,417 million by 11.7%.

Highlights of the Release

Total cost of sales was $1,972 million for the second quarter, up 16.5% year over year.

Operating income came in at $728 million, up 38.9% from $524 million in the year-ago period.

Interest expenses totaled $237 million, up 8.7% from $218 million in the year-earlier period.

Year to date, the company has agreed to acquire 2,912 megawatt (MW) of renewables and energy storage under long-term power purchase agreements, bringing its backlog to 8,471 MW.

Financial Condition

It reported cash and cash equivalents of $1,213 million as of Jun 30, 2021 compared with $1,089 million on Dec 31, 2020.

Non-recourse debt totaled $15,290 million as of Jun 30, up from $15,005 million on Dec 31, 2020.

For second-quarter 2021, cash from operating activities was $351 million compared with the year-ago period’s $447 million.

Total capital expenditure for the second quarter amounted to $567 million, which increased from $386 million incurred in the year-ago period.

Guidance

For 2021, the company reaffirmed its EPS guidance in the range of $1.50-$1.58. The Zacks Consensus Estimate for earnings for the current year is pegged at $1.54, which is on par with the mid-point of the guided range. The company reaffirmed 7-9% average annual growth target through 2025.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months. The consensus estimate has shifted 5% due to these changes.

VGM Scores

At this time, AES has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

AES has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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