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Why Is AES (AES) Up 6.2% Since Last Earnings Report?

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A month has gone by since the last earnings report for AES (AES - Free Report) . Shares have added about 6.2% 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 catalysts.

AES Corp Q2 Earnings Beat Estimates, Revenues Down Y/Y

AES Corporation’s second-quarter 2020 adjusted earnings of 25 cents per share beat the Zacks Consensus Estimate of 23 cents by 8.7%. However, earnings fell 3.8% from the year-ago quarter’s 26 cents per share.

Barring one-time adjustment, the company incurred GAAP losses of 13 cents per share in the reported quarter against the GAAP earnings of 2 cents in the prior-year period.

Highlights of the Release

AES Corp generated total revenues of $2,217 million in the second quarter, down 10.7% year over year. The top line also lagged the Zacks Consensus Estimate of $2,498 million by 11.2%.
 
Total cost of sales was $1,693 million in the second quarter, down 14.5% year over year. General and administrative expenses were $40 million, 18.4% lower than the year-ago quarter’s $49 million.

Operating income stood at $524 million, up 4.4% from $502 million in the year-ago period.
 
Interest expenses summed $218 million, down 20.1% from $273 million in the year-earlier period.

Financial Condition

AES Corp reported cash and cash equivalents of $1,417 million as of Jun 30, 2020, compared with $1,029 million as of Dec 31, 2019.

Non-recourse debt totaled $15,639 million as of Jun 30, 2020, up from $14,914 million as of Dec 31, 2019.

In the second quarter of 2020, cash from operating activities was $447 million compared with the year-ago quarter’s $324 million.

Total capital expenditures during the second quarter amounted to $386 million, which increased from $566 million incurred in the year-ago quarter.

Guidance

For 2020, AES Corp. has reaffirmed its EPS guidance of $1.32-$1.42. The Zacks Consensus Estimate for 2020 earnings is pegged at $1.37, which lies at the midpoint of the company’s guided range.

AES Corp. also reaffirms its 2020 Parent Free Cash Flow expectation of $725-$775 million and the average annual growth rate target of 7-9% through 2022.

How Have Estimates Been Moving Since Then?

Estimates review followed a flat path over the past two months.

VGM Scores

Currently, AES has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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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