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AES Corporation (AES) Up 10.2% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for The AES Corporation (AES - Free Report) . Shares have added about 10.2% in that time frame.

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 Beats on Q1 Earnings, Cost of Sales Up Y/Y

AES Corporation’s first-quarter 2018 adjusted earnings per share of 28 cents surpassed the Zacks Consensus Estimate of 25 cents by 12%. Moreover, the bottom line improved 64.7% from the year-ago period’s figure of 17 cents.

Barring one-time adjustments, the company reported earnings of $1.03 in the first quarter against the year-ago period’s loss of 4 cents.

Highlights of the Release

AES Corporation generated total revenues of $2,740 million in the first quarter, up 6.2% year over year. The top line, however, missed the Zacks Consensus Estimate of $3,446 million by 0.5%.

Total cost of sales was $2,084 million in the first quarter, up 3% year over year. General and administrative expenses were $56 million, 3.7% higher than the year-ago quarter’s level of $54 million.

Operating income was up 17.8% year over year to $656 million.

Interest expenses in the quarter were $281 million, down from $287 million in the year-ago quarter.

Financial Condition

AES Corp reported cash and cash equivalents of $1,212 million as of Mar 31, 2018 compared with $949 million as of Dec 31, 2017. Non-recourse debt totaled $13,601 million as of Mar 31, 2018, up from $13,176 million as of Dec 31, 2017.

In the first quarter, cash from operating activities was $515 million compared with the year-ago quarter’s figure of $708 million.

Total capital expenditure in first quarter was $495 million, higher than $474 million a year ago.

Guidance

For 2018, AES Corp reaffirmed its adjusted earnings per share guidance in the range of $1.15-$1.25.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

The AES Corporation Price and Consensus

 

The AES Corporation Price and Consensus | The AES Corporation Quote

VGM Scores

At this time, AES has a nice Growth Score of B and a grade with the same score on the momentum front. The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, 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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