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Why Is AES (AES) Down 26.5% 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 26.5% 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 Q4 Earnings Beat Estimates, Revenues Miss

AES Corporation’s fourth-quarter 2019 adjusted earnings of 35 cents per share surpassed the Zacks Consensus Estimate of 33 cents by 6.1%. However, the bottom line declined 2.8% from the year-ago period’s figure of 36 cents.

Barring one-time adjustments, the company incurred GAAP loss of 12 cents per share in the reported quarter against the GAAP earning of 15 cents in the prior-year period.

For 2019, AES Corp’s adjusted earnings came in at $1.36 per share, which outpaced the Zacks Consensus Estimate of $1.35 by 0.7%. The reported figure also improved 9.7% from $1.24 per share in the prior year.

Highlights of the Release

AES Corp generated total revenues of $2,431 million in the fourth quarter, declined 7.3% year over year. The top line also lagged the Zacks Consensus Estimate of $2,775 million by 12.4%.

The company’s total revenues were $10,189 million in 2019, which missed the Zacks Consensus Estimate of $10,430 million by 2.3%. The reported figure, moreover, dropped 5.1% from $10,736 million registered in the prior year.

Total cost of sales was $1,871 million in the fourth quarter, down 5.3% year over year. General and administrative expenses were $60 million, 3.4% higher than the year-ago quarter’s level of $58 million.

Operating income summed $560 million, down 13.3% from $646 million in the year-earlier period.

Interest expenses summed $262 million, up from $257 million in the year-earlier period.

Financial Condition

AES Corp reported cash and cash equivalents of $1,029 million as of Dec 31, 2019, compared with $1,166 million as of Dec 31, 2018.

Non-recourse debt totaled $14,914 million as of Dec 31, 2019, up from $13,986 million as of Dec 31, 2018.

In 2019, cash from operating activities was $2,466 million compared with the year-ago figure of $2,343 million.

Total capital expenditures in 2019 amounted to $2,405 million, compared to $2,121 million incurred a year ago.

Guidance

For 2020, AES Corp expects its adjusted earnings in the range of $1.40-$1.48 per share. The Zacks Consensus Estimate for full-year earnings is pegged at $1.46 per share, above the mid-point of the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 14.06% due to these changes.

VGM Scores

Currently, AES has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second 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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