AES Stock Skyrockets: Here’s Why Investors Are Piling In Today
AES shares just caught fire—and Wall Street's scrambling to justify the rally. Here's the breakdown.
The surge no one saw coming
Energy stocks were supposed to be yesterday's news. Then AES decided to moon for reasons analysts are still debating over their fourth espresso.
Green energy or greenbacks?
The usual suspects—renewable projects, infrastructure deals—are getting credit. But let's be real: this smells like hedge funds chasing momentum after someone whispered 'electrification' in a Zoom call.
Warning lights flashing
Remember: every 'transformational' utilities play since 2020 eventually crashed back to earth. Will AES defy gravity—or become another institutional bag-holding exercise? Only the algo gods know.
Image source: Getty Images.
AES Q2 earnings
Not all the news is good, however, and there may be reasons for AES to continue retreating -- beyond the obvious: "Trump raised tariffs again." Digging into the report, it turns out that while AES delivered better-than-expected adjusted (i.e., non-GAAP) earnings, its results according to generally accepted accounting principles showed a $0.15-per-share loss.
Management blamed the bulk of the loss on "sales type leases at AES Clean Energy Development." The company also noted that everything from "lower margins from the Energy Infrastructure Strategic Business Unit" to "monetization of the Warrior Run coal plant PPA" weighed on results.
The short answer, though, is that AES lost money in the quarter. That's not good news.
Should you buy AES stock?
Also less than good is the fact that AES couched its forward guidance in similarly flexible "adjusted earnings" terms. AES says it will probably earn $2.10 to $2.26 this year. Analysts polled by S&P Global Market Intelligence, however, think that will translate into no more than $1.69 per share in GAAP earnings.
Still, with AES stock costing only $13 today, that works out to a P/E ratio of less than 8. For a 5.4% dividend payer with a projected 8% long-term growth rate, that's probably cheap enough to buy.
