AES (AES) Valuation After Q3 Beat and 2025 Outlook Reaffirmation: Is Clean-Energy Momentum Priced In?

AES (AES) just delivered stronger than expected third quarter results and reaffirmed its 2025 outlook, a combination that tends to matter for utility investors who are watching earnings visibility and the clean energy transition.

See our latest analysis for AES.

The third quarter beat and guidance reaffirmation have helped AES regain some momentum, with the share price at $13.68 delivering a solid 1 year total shareholder return, while longer term total returns remain underwhelming as the market weighs past risks against cleaner growth ahead.

If this earnings story has you rethinking your watchlist, it could be a good moment to scout other regulated names and explore healthcare stocks as a fresh set of defensives to compare.

With the stock still trading below both analyst targets and some estimates of intrinsic value despite a recent rebound, the key question now is whether AES is a mispriced turnaround or if markets are already factoring in its cleaner growth story.

Most Popular Narrative Narrative: 10.5% Undervalued

With AES last closing at $13.68 against a most-followed fair value of $15.29, the prevailing narrative leans toward meaningful upside if execution holds.

AES's leading, long term pipeline of renewables and energy storage projects backed by robust, multi year Power Purchase Agreements (PPAs) with data center and corporate customers positions the company to capitalize on rapidly rising electricity demand from AI/data centers, accelerating revenue growth and increasing visibility on future cash flows.

Read the complete narrative.

Curious how flat top line assumptions can still support rising margins, faster earnings and a lower future multiple than the sector? The narrative walks through the math behind that apparent contradiction.

Result: Fair Value of $15.29 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering reliance on subsidies and heavy capital needs mean that shifting policy or tighter funding conditions could quickly erode the perceived margin and valuation upside.

Find out about the key risks to this AES narrative.

Build Your Own AES Narrative

If this view does not quite fit your own, or you would rather dig into the numbers yourself, you can build a fresh take in just a few minutes using Do it your way.

A great starting point for your AES research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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