AES looks weak
AES (AES) stock fell 1.7% after its first-quarter earnings on May 7. The utility missed the consensus EPS estimates and reported flattish growth YoY (year-over-year). Recently, the stock has been weak. AES stock has fallen in nine of the last ten trading sessions. The stock has rallied almost 35% over the past 12 months. The Utilities Select Sector SPDR ETF (XLU), the representative of the biggest utilities in the country, has risen 13% during the same period.
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AES trades in the “oversold” zone
The recent weakness in AES stock has pushed it into the “oversold” zone with its RSI (relative strength index) at 15. RSI values below 30 or above 70 indicate an imminent reversal in the stock’s direction.
AES stock is trading at $16.5, which is almost 7% below its 50-day and 6% above its 200-day moving average levels. The company’s 200-day level close to ~$15.6 might act as a support for the stock in the short term.
AES reported an EPS of $0.28. In the first quarter of 2018, the company reported an EPS of $0.28. AES’s management reaffirmed average earnings and cash flow growth of 7%–9% through 2022. AES’s revenues in the first quarter were $2.65 billion—a fall of more than 3% YoY.
AES generates a large portion of its earnings from competitive operations. The company reduced its global presence from 28 countries in 2011 to 15 countries in the first quarter. The relatively smaller presence might have reduced AES’s exchange risk and commodity exposure, which could bring more stable and predictable earnings in the long term.