Analysts Expect AES to Have a Decent Upside
According to Wall Street analysts, AES Corporation (AES) has a one-year price target of $12.52, compared with its current price of $11.30. The price target implies an estimated upside of nearly 11%. It’s one of the most attractive upsides among the S&P 500 Utilities (XLU). Of the 12 analysts tracking AES, five recommend it as a “hold,” four recommend it as a “buy,” one recommends it as a “strong buy,” and two recommend it as a “sell.”
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The potential upside proposed by AES is much higher than what industry giants are currently offering. Analysts have assigned Southern Company (SO) a price target of $50.67. Compared with its current price of $50.37, the target implies a rise of just 0.9% over the next year. Duke Energy’s (DUK) price target is $80.67, and its current price is $81.87, which implies a fall of 1.0% over the next year.
AES generates more than 80% of its total earnings from competitive operations. Also, it operates in 17 countries. Nearly 70% of its total earnings come from outside the United States. Therefore, a stronger dollar tends to dent AES’s earnings, as it has in the past several quarters. Less stable earnings lead to volatile stock movements, making it a risky utility.
On a positive note, AES’s dividend growth has been remarkable in the last few years. Importantly, AES’s dividends are expected to rise ~10% going forward, one of the largest rises in the sector (XLU). We’ll discuss its dividend profile in detail later in this series.