The AES Corporation’s (AES - Free Report) efforts to streamline portfolio through divestments of non-profitable businesses are driving performance. The company’s focus on renewable and involvement in partnerships are expected to boost growth.
Let’s take a look at the factors that are working in favor of this utility.
Zacks Rank and VGM Score
The company currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Our proprietary VGM Score is based on research that has proven that stocks with the best value, growth and momentum characteristics outperform the market. V stands for Value, G for Growth and M for Momentum. The AES Corporation has a VGM Score of B.
The Zacks Consensus Estimate for 2019 earnings per share is pegged at $1.34 on $10.86-billion revenues. The bottom and the top line are expected to rise 8.06% and 1.14% on a year-over-year basis, respectively.
The consensus mark for 2020 earnings is pegged at $1.44 per share on revenues of $11.18 billion. While the bottom line suggests a 7.46% increase, the top line calls for a 2.94% rise on a year-over-year basis.
The company’s long-term (three to five years) earnings growth is pegged at 8.49%.
Long-Term Price Performance & Dividend Yield
In the past three years, shares of the company have surged 30.8% compared with the industry’s growth of 18.8%.
The current dividend yield of the company is 3.35%, higher than the S&P 500 average of 1.91% and the industry’s 2.81%.
The company is rapidly expanding its renewable footprint overseas. AES Corp’s Alto Maipo hydroelectric project in Chile is nearly 80% complete as of August 2019 and is expected to begin commercial operations in the second half of 2020. The company signed long-term contracts for 525 MW of renewable capacity during the second quarter, which increases its backlog to 6,764 MW.
This includes 4,546 MW under construction, which is expected to commence operation through 2021 and 2,218 MW of renewables signed under long-term PPAs. It also includes 219 MW of solar capacity at AES Distributed Energy with commercial and industrial customers in the United States, 175 MW of solar at sPower with a utility in the country and 100 MW of energy storage with a domestic utility. Such developments will likely fortify AES Corp.’s position in the U.S. renewable space.
Other Stocks to Consider
Some other top-ranked stocks in the utility sector are IDACORP Inc (IDA - Free Report) , NRG Energy, Inc (NRG - Free Report) and NiSource, Inc (NI - Free Report) , each holding a Zacks #2.
IDACORP, NRG Energy and NiSource delivered average positive earnings surprise of 7.79%, 11.64% and 18.97%, respectively, in the last four quarters.
Long-term earnings growth for IDACORP, NRG Energy and NiSource is pegged at 3.85%, 36.30% and 5.39%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>