Is AES Stock a Buy?
Over the last four years, AES (NYSE: AES) has undergone a turnaround. It went from being an international electrical utility operator with substantial earnings volatility to a renewable energy leader with growing earnings, an impressive project pipeline, and an S&P 500-beating stock with a generous dividend. AES' recent earnings call reveals where the company is headed in the short term. Judging by the company's track record in recent years and its performance through the COVID-19 pandemic, AES may be a utility stock worth paying attention to.
One of the key issues that AES faced in years past was its revenue and earnings volatility. This was because, unlike many U.S.-based utilities, AES also builds and operates power plants in the developing world, with currencies that fluctuate against the U.S. dollar, and made energy primarily from sources that can fluctuate significantly in price and availability -- primarily fossil fuels and hydro (or dams).
However, since 2016, AES has been focusing on three areas to achieve a more stable business model: selling the energy it generates via long-term take-or-pay contracts, executing these contracts in dollar-denominated currencies with credit-worthy clients, and stabilizing the costs it incurs to make the energy it sells.
Source Fool.com
