ASX:AGL

Stock Analysis Report

Executive Summary

AGL Energy Limited provides energy to residential, small and large business, and wholesale customers in Australia.

Rewards

Trading at 42.4% below its fair value

Pays a high and reliable dividend of 5.79%

Risk Analysis

Earnings are forecast to decline by an average of -5.4% per year for the next 3 years

Profit margins (6.8%) are lower than last year (12.3%)



Snowflake Analysis

6 star dividend payer and undervalued.


Similar Companies

Share Price & News

How has AGL Energy's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AGL has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.0%

AGL

0%

AU Integrated Utilities

0%

AU Market


1 Year Return

-7.8%

AGL

0%

AU Integrated Utilities

0%

AU Market

Return vs Industry: AGL underperformed the Australian Integrated Utilities industry which returned 16.9% over the past year.

Return vs Market: AGL underperformed the Australian Market which returned 19.4% over the past year.


Shareholder returns

AGLIndustryMarket
7 Day-4.0%0%0%
30 Day-4.7%0%0%
90 Day1.3%0%0%
1 Year-2.2%-7.8%0%0%0%0%
3 Year2.5%-11.9%0%0%0%0%
5 Year76.6%40.6%0%0%0%0%

Price Volatility Vs. Market

How volatile is AGL Energy's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is AGL Energy undervalued compared to its fair value and its price relative to the market?

44.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: AGL (A$20.55) is trading below our estimate of fair value (A$35.68)

Significantly Below Fair Value: AGL is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: AGL is good value based on its PE Ratio (14.9x) compared to the Integrated Utilities industry average (20.9x).

PE vs Market: AGL is good value based on its PE Ratio (14.9x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: AGL's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: AGL is good value based on its PB Ratio (1.6x) compared to the XX Integrated Utilities industry average (2x).


Next Steps

Future Growth

How is AGL Energy forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

-5.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AGL's earnings are forecast to decline over the next 3 years (-5.4% per year).

Earnings vs Market: AGL's earnings are forecast to decline over the next 3 years (-5.4% per year).

High Growth Earnings: AGL's earnings are forecast to decline over the next 3 years.

Revenue vs Market: AGL's revenue is expected to decline over the next 3 years (-0.4% per year).

High Growth Revenue: AGL's revenue is forecast to decline over the next 3 years (-0.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AGL's Return on Equity is forecast to be low in 3 years time (9.5%).


Next Steps

Past Performance

How has AGL Energy performed over the past 5 years?

35.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AGL has high quality earnings.

Growing Profit Margin: AGL's current net profit margins (6.8%) are lower than last year (12.3%).


Past Earnings Growth Analysis

Earnings Trend: AGL's earnings have grown significantly by 35.2% per year over the past 5 years.

Accelerating Growth: AGL's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: AGL had negative earnings growth (-42.8%) over the past year, making it difficult to compare to the Integrated Utilities industry average (-9.8%).


Return on Equity

High ROE: AGL's Return on Equity (10.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is AGL Energy's financial position?


Financial Position Analysis

Short Term Liabilities: AGL's short term assets (A$3.4B) exceed its short term liabilities (A$2.5B).

Long Term Liabilities: AGL's short term assets (A$3.4B) do not cover its long term liabilities (A$3.8B).


Debt to Equity History and Analysis

Debt Level: AGL's debt to equity ratio (32.4%) is considered satisfactory.

Reducing Debt: AGL's debt to equity ratio has reduced from 49.7% to 32.4% over the past 5 years.

Debt Coverage: AGL's debt is well covered by operating cash flow (58.5%).

Interest Coverage: AGL's interest payments on its debt are well covered by EBIT (12.9x coverage).


Balance Sheet

Inventory Level: AGL has a high level of physical assets or inventory.

Debt Coverage by Assets: AGL's debt is covered by short term assets (assets are 1.2x debt).


Next Steps

Dividend

What is AGL Energy's current dividend yield, its reliability and sustainability?

5.96%

Current Dividend Yield


Dividend Yield vs Market

company6.0%marketbottom25%0%markettop25%0%industryaverage0%forecastin3Years4.9%

Current dividend yield vs market & industry

Notable Dividend: AGL's dividend (5.79%) is higher than the bottom 25% of dividend payers in the Australian market (2.34%).

High Dividend: AGL's dividend (5.79%) is in the top 25% of dividend payers in the Australian market (5.47%)


Stability and Growth of Payments

Stable Dividend: AGL's dividends per share have been stable in the past 10 years.

Growing Dividend: AGL's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (86.2%), AGL's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AGL's dividends in 3 years are forecast to be covered by earnings (77.4% payout ratio).


Next Steps

Management

What is the CEO of AGL Energy's salary, the management and board of directors tenure and is there insider trading?

2.5yrs

Average management tenure


CEO

Brett Redman (49yo)

1.4yrs

Tenure

AU$3,198,042

Compensation

Mr. Brett Redman, BCom, FCA, GAICD has been Chief Executive Officer and Managing Director of AGL Energy Limited since January 1, 2019. He was an Interim Chief Executive Officer at AGL Energy Limited since  ...


CEO Compensation Analysis

Compensation vs Market: Brett's total compensation ($USD2.21M) is about average for companies of similar size in the Australian market ($USD2.84M).

Compensation vs Earnings: Brett's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

2.5yrs

Average Tenure

Experienced Management: AGL's management team is considered experienced (2.5 years average tenure).


Board Age and Tenure

3.3yrs

Average Tenure

62.5yo

Average Age

Experienced Board: AGL's board of directors are considered experienced (3.3 years average tenure).


Insider Trading

Insider Buying: AGL insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$44,16429 Dec 19
State Street Global Advisors, Inc.
EntityCompany
Shares10,838
Max PriceAU$20.55
BuyAU$25,14018 Dec 19
John Stanhope
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,200
Max PriceAU$20.95
SellAU$286,16126 Sep 19
Brett Redman
EntityIndividual
Role
Chief Executive Officer
MD, CEO & Director
Shares15,000
Max PriceAU$19.08
BuyAU$47,00026 Sep 19
Peter Botten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,500
Max PriceAU$18.80
BuyAU$39,66913 Aug 19
Jacqueline Hey
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,100
Max PriceAU$18.89
BuyAU$74,50612 Aug 19
Patricia McKenzie
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares3,900
Max PriceAU$19.10
BuyAU$57,24212 Aug 19
Leslie Hosking
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares3,000
Max PriceAU$19.08
BuyAU$38,14012 Aug 19
Diane Smith-Gander
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares2,000
Max PriceAU$19.07

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Kellie Benda (51yo)

    General Manager of Sales

    • Doug Jackson

      Executive General Manager of Group Operations

      • Tenure: 4.2yrs
      • Compensation: AU$1.52m
    • John Fitzgerald

      General Counsel & Company Secretary

      • Tenure: 12.1yrs
    • Andrew Scannell

      Head of Media

      • Brett Redman (49yo)

        MD, CEO & Director

        • Tenure: 1.4yrs
        • Compensation: AU$3.20m
      • Simon Moorfield

        Executive General Manager of Information Systems & Technology

        • Tenure: 2.5yrs
      • Richard Wrightson

        Executive General Manager of Wholesale Markets

        • Tenure: 2.5yrs
        • Compensation: AU$1.31m
      • Chris Kotsaris

        Interim Head of Investor Relations

        • Damien Nicks

          Chief Financial Officer

          • Tenure: 1.4yrs
          • Compensation: AU$1.05m
        • Mark Enzinger

          Interim Chief Customer Officer

          • Tenure: 1.2yrs
          • Compensation: AU$777.05k

        Board Members

        • John Stanhope (68yo)

          Independent Non-Executive Director

          • Tenure: 10.8yrs
          • Compensation: AU$269.10k
        • Peter Botten (64yo)

          Independent Non-Executive Director

          • Tenure: 3.3yrs
          • Compensation: AU$225.95k
        • Les Hosking (74yo)

          Independent Non-Executive Director

          • Tenure: 11.2yrs
          • Compensation: AU$242.35k
        • Graeme Hunt (62yo)

          Independent Chairman

          • Tenure: 2.3yrs
          • Compensation: AU$573.70k
        • Diane Smith-Gander (61yo)

          Independent Non-Executive Director

          • Tenure: 3.3yrs
          • Compensation: AU$257.95k
        • Jacquie Hey (53yo)

          Independent Non-Executive Director

          • Tenure: 3.8yrs
          • Compensation: AU$264.15k
        • Patricia McKenzie (63yo)

          Non-Executive Director

          • Tenure: 0.7yrs
          • Compensation: AU$38.39k
        • Brett Redman (49yo)

          MD, CEO & Director

          • Tenure: 1.4yrs
          • Compensation: AU$3.20m

        Company Information

        AGL Energy Limited's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: AGL Energy Limited
        • Ticker: AGL
        • Exchange: ASX
        • Founded: 1837
        • Industry: Multi-Utilities
        • Sector: Utilities
        • Market Cap: AU$12.755b
        • Shares outstanding: 639.00m
        • Website: https://www.agl.com.au

        Number of Employees


        Location

        • AGL Energy Limited
        • 200 George Street
        • Level 24
        • Sydney
        • New South Wales
        • 2000
        • Australia

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        AGLASX (Australian Securities Exchange)YesOrdinary SharesAUAUDOct 2006
        AGLN.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 2006
        N9Z1DB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2006
        AGLCHIA (Chi-X Australia)YesOrdinary SharesAUAUDOct 2006
        AGLX.YOTCPK (Pink Sheets LLC)SPONSORED ADSUSUSDJun 2008

        Biography

        AGL Energy Limited provides energy to residential, small and large business, and wholesale customers in Australia. It operates in four segments: Wholesale Markets, Customer Markets, Group Operations, and Investments. The company engages in generating electricity through thermal, hydro, wind, and solar power generation plants; gas storage activities; and the retail sale of electricity, gas, solar, and energy products and services. The company operates electricity generation portfolio of 10,413 megawatts; the Newcastle gas storage facility in New South Wales; the Silver Springs underground gas storage facility in Queensland; natural gas production assets at Camden in New South Wales; and the North Queensland gas assets. It serves 3.7 million customer accounts. AGL Energy Limited was founded in 1837 and is based in Sydney, Australia. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/26 10:36
        End of Day Share Price2020/01/24 00:00
        Earnings2019/06/30
        Annual Earnings2019/06/30


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.