The AES Corporation (AES): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


The AES Corp. posted mixed financial results in the first quarter of 2014 with earnings trailing the Zacks Consensus Estimate while revenues beating the same. Poor hydrology conditions, lack of gas availability and forced outages proved to be a drag on the company's earnings. AES Corp.'s strategic exits from non-core markets and subsequent focus on high-return assets will act as tailwinds. The company benefited from its cost-saving initiatives and will continue to move ahead with the measures which will lend stability to its margin. The bullish power demand from the international markets will further support the company's series of utility-scale projects. In addition, effective share repurchase program and attractive dividend growth will retain investors' confidence on the stock. However, strict environmental mandates and rise in corporate income tax by foreign countries could act as growth deterrents. Thus, we maintained our Neutral recommendation on the stock


Arlington, Va.-based The AES Corporation (AES), incorporated in 1981, is a global power company. The company's businesses are spread across 5 continents in 20 countries. The company has six Strategic Business Units located in the United States, the Andes (Chile, Columbia and Argentina), Brazil, MCAC (Mexico, Central America and Carribean), EMEA (Europe, Middle East, Africa) and Asia.

AES Corporation operates in two lines of business Generation and Utilities.


In the generation business, the company operates power plants to generate and sell power to wholesale customers such as utilities and other intermediaries. AES Corporation's generation business consists of 106 generation facilities. The generation business uses a range of technologies and fuel types including coal, combined-cycle gas turbines, hydroelectric power and biomass. The company is the largest generator of electricity in Panama and second largest in Chile. The majority of electricity produced by the Generation business is sold under long-term contracts, or Power Purchase Agreements (PPA), to wholesale customers.


In the utilities business, the company operates utilities to distribute, transmit and sell electricity to customers in the residential, commercial, industrial and governmental sectors in a defined service area. These businesses have structures ranging from pure distribution businesses to fully integrated utilities, which generate, transmit and distribute power.

At the end of 2013, the company owned gross generation capacity of 37,159 megawatt (MW) with a customer base of 11.5 million.

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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 , Stocks

Referenced Stocks: AES , PPA

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