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A Look at the Earnings and Revenue Drivers for AES


Mar. 1 2018, Updated 1:55 p.m. ET

What drove the EPS growth for AES?

AES Corporation’s (AES) cost of sales dropped 1.0% in 2016 before rising 4.0% in 9M17. As a result, its gross profit fell 15.0% in 2016 before expanding 11.0% in 9M17.

AES Corporation’s general and administrative expenses decreased 1.0% in 2016 and rose 15.0% in 9M17. This led to a 16.0% fall in operating income for 2016 before gaining 11.0% in 9M17.

AES Corporation’s (AES) other net expenses rose 39.0% in 2016 before falling 10.0% in 9M17. The rise in 2016 was due to higher interest and asset impairment expenses. The company recorded a significant gain and loss on sale of assets in 9M16 and 9M17, respectively.

These factors translated into a 28.0% fall in net income for 2016 before growing 10.0% in 9M17. The company’s EPS (earnings per share) fell 22.0% in 2016 before gaining 3.0% in 9M17. Its 2016 earnings per share were enhanced by share buybacks.

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What will drive the future revenues and EPS for AES?

AES Corporation (AES) formed a joint venture to sell energy storage platforms in more than 160 countries. It completed two new lithium-ion battery-based energy storage projects totaling 20 megawatts (or MW) in the Dominican Republic.

The company has an agreement to acquire the 306 MW Mesa La Paz wind development project in Mexico. It settled the acquisition of the 75 MW Boa Hora solar project and signed an agreement to acquire the 150 MW Bauru solar project.

AES Corporation has 4,795 MW of capacity under construction. It also invested in long-term renewable growth projects and completed the acquisition of FTP Power.

AES Corporation’s revenues are projected to grow 2.0% in both 2017 and 2018. Its earnings per share are expected to grow 4.0% in 2017 and 14.0% in 2018.

The company has a PE (price-to-earnings) ratio of 862.2x and a dividend yield of 5.0%. In comparison, the sector’s average PE is 58.6x, and its dividend yield is 3.7%.

Dividend ETFs with exposure to the utility sector

The WisdomTree US Dividend Growth ETF (DGRW) has a PE (price-to-earnings) ratio of 20.3x and a dividend yield of 2.5%. It has 0.0% exposure to the utility sector.

The WisdomTree US SmallCap Dividend ETF (DES) has a PE ratio of 20.7x and a dividend yield of 7.1%. DES has 6.0% exposure to the utility sector.


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