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Why Is AES (AES) Down 3.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for AES (AES - Free Report) . Shares have lost about 3.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AES due for a breakout? 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 Q2 Earnings Miss Estimates, Revenues Down Y/Y

AES Corp’s second-quarter 2018 adjusted earnings per share of 25 cents missed the Zacks Consensus Estimate of 28 cents by 10.7%. However, the bottom line remained flat with the year-ago period’s figure.

Barring one-time adjustments, the company delivered GAAP earnings of 15 cents in the reported quarter compared with 8 cents in the prior year.

Highlights of the Release

AES Corp generated total revenues of $2,537 million in the second quarter, down 2.9% year over year. The top line also lagged the Zacks Consensus Estimate of $3,406 million by 25.5%.

Total cost of sales was $1,937 million in the second quarter, down 2.7% year over year. General and administrative expenses were $35 million, 28.6% lower than the year-ago quarter’s level of $49 million.

Operating income fell 3.7% year over year to $600 million.

Interest expenses in the quarter under review were $263 million, lower than $276 million in the year-earlier period.

Financial Condition

AES Corp reported cash and cash equivalents of $1,140 million as of Jun 30, 2018, compared with $949 million as of Dec 31, 2017.

Non-recourse debt totaled $14,230 million as of Jun 30, 2018, up from $13,176 million as of Dec 31, 2017.

In the second quarter, cash from operating activities was $399 million compared with the year-ago quarter’s $254 million.

Total capital expenditure in the second quarter was $499 million, which came in below $649 million a year ago.

Guidance

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

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 9.69% due to these changes.

VGM Scores

Currently, AES has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. 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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