Technology

AES (AES) Up 5.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for AES (AES). Shares have added about 5.1% in that time frame, outperforming the S&P 500.

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

AES Corp Q4 Earnings Beat Estimates, Revenues Miss

AES Corporation’s fourth-quarter 2018 adjusted earnings of 36 cents per share surpassed the Zacks Consensus Estimate of 33 cents by 9.1%. However, the bottom line declined 16.3% from the year-ago period’s figure.

Barring one-time adjustments, the company delivered GAAP earnings of 15 cents per share in the reported quarter against a loss of $1.03 incurred in the prior-year period.

For 2018, AES Corp’s adjusted earnings came in at $1.24 per share, which outpaced the Zacks Consensus Estimate of $1.21 by 2.5%. The reported figure also improved 14.8% from $1.08 per share in the prior year.

Highlights of the Release

AES Corp generated total revenues of $2.62 billion in the fourth quarter, declined 0.8% year over year. The top line also lagged the Zacks Consensus Estimate of $2.71 million by 3.3%.

The company’s total revenues were $10.74 billion in 2018, which missed the Zacks Consensus Estimate of $10.97 billion by 2.1%. The reported figure, however, rose 2% from $10.53 billion registered in the prior year.

Total cost of sales was $1,976 million in the fourth quarter, down 1.1% year over year. General and administrative expenses were $58 million, 3.3% lower than the year-ago quarter’s level of $60 million.

Operating income remained almost flat at $646 million.

Interest expenses summed $257 million, down from $310 million in the year-earlier period.

Financial Condition

AES Corp reported cash and cash equivalents of $1,166 million as of Dec 31, 2018, compared with $949 million as of Dec 31, 2017.

Non-recourse debt totaled $13,986 million as of Dec 31, 2018, up from $13,176 million as of Dec 31, 2017.

In 2018, cash from operating activities was $2.34 billion compared with the year-ago figure of$2.50 billion.

Total capital expenditures in 2018 amounted to $2.12 billion, which came in below $2.18 billion incurred a year ago.

Guidance

For 2019, AES Corp expects its adjusted earnings in the range of $1.28-$1.40 per share. The Zacks Consensus Estimate for full-year earnings is pegged at $1.31 per share, below the mid-point of the company’s guided range.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

Currently, AES has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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