A month has gone by since the last earnings report for AES (AES - Free Report) . Shares have added about 7.1% 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 the most recent earnings report in order to get a better handle on the important catalysts.
AES Corp Q3 Earnings Beat Estimates, Revenues Down Y/Y
AES Corporation’s third-quarter 2019 adjusted earnings of 48 cents per share surpassed the Zacks Consensus Estimate of 40 cents by 20%. Moreover, earnings grew 37.1% from the year-ago quarter’s 35 cents per share.
Barring one-time adjustment, the company delivered GAAP earnings of 32 cents per share in the reported quarter compared with 15 cents in the prior-year period.
Highlights of the Release
AES Corp generated total revenues of $2,625 million in the third quarter, down 7.5% year over year. The top line also lagged the Zacks Consensus Estimate of $2,966 million by 11.5%.
Total cost of sales was $1,924 million in the third quarter, down 11.2% year over year. General and administrative expenses were $41 million, 4.7% lower than the year-ago quarter’s $43 million.
Operating income stood at $701 million, up 4.5% from $671 million in the year-ago period.
Interest expenses summed $250 million, down 2% from $255 million in the year-earlier period.
Highlights of the Quarter
AES Corp. signed 921 MW of new PPAs during the third quarter of 2019, for a total of 1.9 GW year-to-date. The Company formed a 10-year strategic alliance with Google to develop and implement solutions to enable broad adoption of clean energy. It also received approval from the Government of Vietnam to develop the 2.2 GW Son My 2 CCGT.
AES Corp reported cash and cash equivalents of $1,145 million as of Sep 30, 2019, compared with $1,166 million as of Dec 31, 2018.
Non-recourse debt totaled $14,323 million as of Sep 30, 2019, up from $13,986 million as of Dec 31, 2018.
In the third quarter of 2019, cash from operating activities was $761 million compared with the year-ago quarter’s $767 million.
Total capital expenditures during the third quarter amounted to $558 million, which increased from $598 million incurred in the year-ago quarter.
For 2019, AES Corp reaffirmed its 2019 Adjusted EPS guidance of $1.30-$1.38. It also reaffirmed its average annual growth rate target of 7-9% through 2022.
The Zacks Consensus Estimate for earnings is currently pegged at $1.34, which is the mid-point of the company’s guided range.
AES Corp also reaffirmed its 2019 Parent Free Cash Flow expectation of $700-$750 million.
How Have Estimates Been Moving Since Then?
Estimates revision followed a flat path over the past two months. The consensus estimate has shifted -6.61% due to these changes.
At this time, AES has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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.
AES has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.