AES
The AES Corporation$16.28
Sell
Target $9.79
Report: Feb 19, 2026Utilities • Diversified Utilities • Asset-Based OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$16.28-39.9%
Rec: SellConviction: Medium
Entry Target
N/A
N/A
Fair Value
$9.79
(40% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$17.65
52 Week Low$9.46
Avg. 3 Month Volume13.03M
Efficiency
LTM Gross Margin18.1%
LTM EBITDA Margin29.4%
LTM EBIT Margin17.5%
LTM Operating Margin10.5%
LTM ROA1.8%
LTM ROE24.7%
LTM ROIC3.2%
LTM ROCE5.2%
Capital Structure
Market Cap (MM)$10.0B
Enterprise Value (MM)$38.5B
Shares Outstanding712.56M
Total Debt (MM)$30.51B
Cash & Equivalents (MM)$2.07B
LTM Net Debt (MM)$28.44B
LTM Net Debt/EBITDA7.9x
Growth
TTM Rev. Growth-0.4%
Last 3-Yr Rev. CAGR-1.0%
Last 3-Yr EBITDA CAGR23.9%
Last 3-Yr EPS CAGRN/A
Valuation
Street Target Price$17.14
LTM EV/Revenue3.1x
LTM EV/Gross Profit17.4x
LTM EV/EBIT18.0x
LTM EV/EBITDA10.7x
LTM P/E11.0x
LTM EV/FCF-23.7x
LTM P/FCF-6.2x
LTM P/TB0.2x
LTM P/B2.5x
Dividend Yield5.0%
Payout Ratio55.9%
Executive SummarySituation: Current price is $16.28 versus fair value $9.79 (-39.9% expected return), and valuation confidence is stable. Debate: Bull case depends on Credit Rating Downgrade: Fitch and S&P currently maintain a BBB- rating with a stable outlook. Bear case centers on Over-Leverage and Refinancing Risk: The company has $31.9 billion in debt, with 34.6% maturing within one year. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The primary bull case rests on the 'data center super-cycle,' where AES's 4.4 GW PPA backlog and ability to provide 24/7 carbon-free energy to hyperscalers like Google and Amazon drive massive EBITDA growth. Proponents also point to the $150 million cost-savings program and the potential for a re-rating if the company successfully achieves its 5-7% EBITDA growth targets through 2027.
Bear Case
The bear case is anchored in financial insolvency risk. With a free cash flow deficit of $4.64 billion and net leverage at 10.4x, the company is effectively a 'zombie' utility that requires constant asset sales to fund its dividend and capex. Any slowdown in the renewable transition or a spike in interest rates could trigger a credit downgrade, as the company's ROIC of 1.7% is fundamentally value-destructive.
Key Catalysts
Mid-Term (6-18 months)Impact: Critical
Credit Rating Downgrade: Fitch and S&P currently maintain a BBB- rating with a stable outlook. However, they have cautioned against high con...
Mid-Term (6-18 months)Impact: High
Dividend Cut: The company currently pays a $0.70 annual dividend, costing approximately $500 million per year. Given the $4.64 billion FCF d...
Long-Term (18+ months)Impact: Moderate
AES is relevant for analysis now because the stock is trading near its 52-week high despite a material weakness in internal controls and a d...
Primary Risks
Concern: High
Over-Leverage and Refinancing Risk: The company has $31.9 billion in debt, with 34.6% maturing within one year. A spike in interest rates or...
Concern: Medium
Regulatory and Policy Risk: The company's renewable growth is heavily dependent on IRA tax credits and favorable utility rate cases. A chang...
Concern: Medium
The stewardship verdict is poor due to the combination of value-destructive reinvestment and material weaknesses in internal controls. While...
Recent Activity
2026-02-03Analyst Target
+9.23%Firm: Jefferies Price Target: $16.00 Price When Posted: $15.74 Implied Upside: +1.6%
2025-11-05SEC Filing (8-K)
+5.80%Excerpt: Source: Attachment (EX-99.1) Document Press Release Investor Contact: Susan Harcourt 703-682-1204, susan.harcourt@aes.com Media Contact: Amy Ackerman 703-682-6399, amy.ackerman@aes.com AES Reports Third Quarter 2025 Results...
2025-05-13SEC Filing (SC 13G/A)
+5.73%Excerpt: SCHEDULE 13G/A 1 primary_doc.xml SCHEDULE 13G/A 0000315066-24-000961 0000315066 XXXXXXXX LIVE 2 COMMON STOCK 03/31/2025 00
2025-05-10SEC Filing (8-K)
+6.74%Excerpt: Source: Main Body +-----------------------------------------------------------------------------+ | UNITED STATES | +-----------------------------------------------------------------------------+...
2025-03-15SEC Filing (8-K)
+6.01%Excerpt: Source: Main Body UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event...
Valuation Table
8.2/10Decision Grade
Scenario Range
$0
Bear
$10
Base
$16
Bull
$16