AES Beats, Trims Guidance - Analyst Blog

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Before the bell, The AES Corporation ( AES ) reported fourth quarter and fiscal 2011 results. In the reported quarter, the company with adjusted EPS of 23 cents beat the Zacks Consensus Estimate of 20 cents. However, adjusted EPS for the reported quarter fell short of the year-ago EPS of 25 cents.

On a GAAP basis, the company reported EPS of 12 cents compared with 16 cents in the year-ago quarter. The 11-cent variance in adjusted and GAAP EPS came from impairment losses of 8 cents and currency transaction losses of 3 cents.

Fiscal 2011 adjusted earnings came in at $1.04 per share, more than the Zacks Consensus Estimate of $1.01. This also came above fiscal 2010 earnings of 98 cents per share.

In fiscal 2011, on a GAAP basis, the company reported EPS of 59 cents compared with 63 cents in fiscal 2010. The variance of 45 cents per share in fiscal 2011 between reported and adjusted earnings came from impairment losses of 36 cents, currency transaction losses of 4 cents, debt retirement losses of 4 cents, and derivative mark-to-market loss of a penny.

Operational Results

In the reported quarter, consolidated revenue of $4,269 million beat the Zacks Consensus Estimate of $4,118 million and year-ago quarterly revenue of $4,230 million. The rise in revenues year over year was due to contributions from new businesses; higher volume at its businesses in Brazil due to higher market demand; increased generation in Asia; and higher rates in El Salvador and Ukraine. These gains were partially offset by unfavorable foreign currency translation; lower prices at Eletropaulo in Brazil; lower volumes in Chile and Spain; and the unfavorable impact of non-cash, unrealized mark-to-market derivative loss at Sonel in Cameroon.

Consolidated gross profit increased by $65 million to $1,095 million, benefiting from increased volume at its generation businesses in Latin America; higher spot pricing and receipt of insurance proceeds in Panama; contributions from new businesses; and lower fixed costs at Eletropaulo. These gains were partially offset by unfavorable foreign currency translation; lower prices at Eletropaulo in Brazil; and the non-cash, unrealized mark-to-market derivative loss at Sonel.

Fiscal 2011 revenue was $17,274 million versus the Zacks Consensus Estimate of $16,795 million. Full year revenue also came above the $15,828 million generated in fiscal 2010.

Financial Condition

AES Corporation reported cash and cash equivalents of $1,710 million at the end of fiscal 2011 from $2,525 million at the end of fiscal 2010. The company generated $2,884 million in cash from operating activities in fiscal 2011 compared with $3,465 million of cash generated in fiscal 2010. Consolidated free cash flow decreased to $1,924 million compared with $2,667 million at the end of the year-ago period. Long-term liabilities increased to $27,080 million from $21,973 million at fiscal-end 2010.

Outlook

Looking ahead, AES Corporation trimmed its 2012 adjusted earnings guidance to a range of $1.22-$1.30 per share, from the prior forecast between $1.27-$1.37 per share.

In the near term, we see shares of the company underperforming versus the broader market and thus reiterate short-term Zacks #4 Rank (Sell rating) on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peer Huaneng Power International Inc. ( HNP ).


 
AES CORP ( AES ): Free Stock Analysis Report
 
HUANENG POWER ( HNP ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AES , HNP

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