AES CorporationAES

Morningstar Rating

Stock Research and Analysis

by Ryan McLean

AES thrives in challenging but historically high-growth power markets in Latin America and around the world. We don't mind that dividends will remain on ice in order for the firm to make the most of its expansion opportunities.

Although its fate is Read more

Bulls Say

AES operates in energy-thirsty regions with economic growth that should exceed that of more-developed markets.

By bringing to bear its operational expertise and financial heft, AES is able to extract incremental value from utility operations in underdeveloped markets.

AES has diversified its operations across 29 countries, which helps reduce country- and region-specific risk.

Two thirds of AES' debt is nonrecourse to the holding company, which helps protect shareholders if individual projects fail.

Regulated returns and long-term contracts help stabilize cash flows in AES' distribution and generation segments, respectively. Read more

Bears Say

AES' capital spending and debt-servicing commitments will preclude dividend payouts for the foreseeable future.

The emerging markets where most of AES' assets are located entail above-average political risk, as underscored by Venezuela's recent nationalization of the firm's Caracas subsidiary.

The company has been embroiled in accounting irregularities that cast a shadow over its governance.

Because AES plans to expand primarily through acquisition, a lack of attractive targets (or merger integration difficulties) could stall growth. Read more

Strategy

AES has grown mostly by acquisitions and says it will continue to purchase generation and distribution assets in targeted markets. The company is investing heavily in new generation, with plans to add Read more

Management

Paul Hanrahan became president and CEO in June 2002, before which he headed various overseas operations for AES. Philip Odeen has served as chairman of the board and lead independent director since January 2008. We believe the interests of the management Read more

Profile

AES operates a portfolio of electricity generation and distribution assets in 29 countries on five continents. The firm's generation segment, which owns 44 gigawatts of Read more

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