Assessing AES Corporation’s Valuation After Argus Upgrade and Renewables Growth Outlook

Argus Research just bumped AES (AES) up to a Buy, pointing to improving profit trends and an ambitious plan to triple renewable capacity by 2027, a shift that could reshape how investors value the stock.

See our latest analysis for AES.

That upbeat call lands after a solid stretch for the stock, with a roughly 9.7% 90 day share price return and an 8.6% one year total shareholder return helping sentiment recover from weak three and five year total shareholder returns.

If AES’s transition and dividend story has your attention, it could be a good moment to widen the lens and explore healthcare stocks as another pocket of defensive growth potential.

But with AES trading at a discount to its intrinsic value estimate and still below bullish analyst targets, investors now face a key question: is this a genuine entry point, or is future growth already priced in?

Most Popular Narrative: 8.7% Undervalued

With the narrative pointing to fair value modestly above the recent 13.96 close, the spotlight shifts to how future profits might re rate AES from here.

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 potentially benefit from rising electricity demand from AI/data centers, with implications for revenue growth and visibility on future cash flows.

The ongoing decline in costs of solar, wind, and battery technologies is supporting returns on new projects, even as government tax incentives fade, which may allow AES to expand margins and reduce the long term cost structure, affecting EBITDA and net margins.

Read the complete narrative.

Curious how a slow top line, expanding margins, and a future earnings multiple below sector norms can still be used to justify a higher value for AES? The full narrative lays out the math, the timing, and the profitability shift that underpin this view.

Result: Fair Value of $15.29 (UNDERVALUED)

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

However, the narrative could crack if subsidy support fades faster than expected, or if prolonged interconnection delays push key data center projects and earnings out.

Find out about the key risks to this AES narrative.

Build Your Own AES Narrative

If this view does not fully match your own, or you would rather analyze the numbers yourself, you can quickly build a narrative in under three minutes: 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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