Intrinsic value of AES - AES

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$11.29

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$11.29

 
Intrinsic value

$2.05

 
Up/down potential

-82%

 
Rating

str. sell

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AES stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 7.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -4.02
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
Revenue, $m
  13,586
  14,958
  16,393
  17,889
  19,449
  21,072
  22,761
  24,515
  26,339
  28,234
  30,204
  32,251
  34,380
  36,594
  38,898
  41,297
  43,796
  46,399
  49,114
  51,946
  54,901
  57,986
  61,209
  64,577
  68,098
  71,780
  75,631
  79,662
  83,881
  88,299
  92,927
Variable operating expenses, $m
 
  13,720
  15,025
  16,386
  17,804
  19,281
  20,816
  22,412
  24,071
  25,794
  27,586
  29,332
  31,268
  33,282
  35,377
  37,559
  39,831
  42,199
  44,668
  47,244
  49,931
  52,737
  55,669
  58,732
  61,934
  65,282
  68,785
  72,451
  76,289
  80,307
  84,515
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  13,447
  13,720
  15,025
  16,386
  17,804
  19,281
  20,816
  22,412
  24,071
  25,794
  27,586
  29,332
  31,268
  33,282
  35,377
  37,559
  39,831
  42,199
  44,668
  47,244
  49,931
  52,737
  55,669
  58,732
  61,934
  65,282
  68,785
  72,451
  76,289
  80,307
  84,515
Operating income, $m
  139
  1,238
  1,368
  1,504
  1,645
  1,792
  1,944
  2,103
  2,268
  2,440
  2,618
  2,919
  3,112
  3,312
  3,521
  3,738
  3,964
  4,200
  4,446
  4,702
  4,969
  5,249
  5,540
  5,845
  6,164
  6,497
  6,846
  7,211
  7,593
  7,993
  8,411
EBITDA, $m
  1,315
  2,591
  2,840
  3,099
  3,370
  3,651
  3,943
  4,247
  4,563
  4,892
  5,233
  5,587
  5,956
  6,340
  6,739
  7,155
  7,587
  8,039
  8,509
  8,999
  9,511
  10,046
  10,604
  11,188
  11,798
  12,436
  13,103
  13,801
  14,532
  15,298
  16,099
Interest expense (income), $m
  1,273
  1,207
  1,315
  1,519
  1,732
  1,954
  2,184
  2,424
  2,673
  2,933
  3,202
  3,482
  3,773
  4,075
  4,390
  4,717
  5,058
  5,413
  5,783
  6,169
  6,571
  6,991
  7,430
  7,888
  8,366
  8,867
  9,390
  9,937
  10,510
  11,110
  11,738
Earnings before tax, $m
  137
  31
  53
  -16
  -87
  -162
  -240
  -321
  -405
  -493
  -584
  -563
  -661
  -763
  -869
  -979
  -1,094
  -1,213
  -1,338
  -1,467
  -1,602
  -1,743
  -1,889
  -2,043
  -2,202
  -2,370
  -2,544
  -2,727
  -2,917
  -3,117
  -3,326
Tax expense, $m
  -188
  8
  14
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -1,141
  23
  39
  -16
  -87
  -162
  -240
  -321
  -405
  -493
  -584
  -563
  -661
  -763
  -869
  -979
  -1,094
  -1,213
  -1,338
  -1,467
  -1,602
  -1,743
  -1,889
  -2,043
  -2,202
  -2,370
  -2,544
  -2,727
  -2,917
  -3,117
  -3,326

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,103
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  36,119
  37,489
  41,084
  44,836
  48,745
  52,813
  57,044
  61,442
  66,013
  70,763
  75,699
  80,830
  86,166
  91,715
  97,490
  103,502
  109,763
  116,289
  123,092
  130,189
  137,596
  145,329
  153,406
  161,847
  170,671
  179,899
  189,552
  199,654
  210,229
  221,302
  232,898
Adjusted assets (=assets-cash), $m
  34,016
  37,489
  41,084
  44,836
  48,745
  52,813
  57,044
  61,442
  66,013
  70,763
  75,699
  80,830
  86,166
  91,715
  97,490
  103,502
  109,763
  116,289
  123,092
  130,189
  137,596
  145,329
  153,406
  161,847
  170,671
  179,899
  189,552
  199,654
  210,229
  221,302
  232,898
Revenue / Adjusted assets
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
  0.399
Average production assets, $m
  24,278
  26,730
  29,294
  31,969
  34,756
  37,656
  40,673
  43,809
  47,068
  50,455
  53,975
  57,633
  61,437
  65,394
  69,511
  73,798
  78,263
  82,916
  87,767
  92,827
  98,108
  103,621
  109,381
  115,399
  121,690
  128,270
  135,153
  142,356
  149,896
  157,791
  166,060
Working capital, $m
  1,139
  374
  410
  447
  486
  527
  569
  613
  658
  706
  755
  806
  860
  915
  972
  1,032
  1,095
  1,160
  1,228
  1,299
  1,373
  1,450
  1,530
  1,614
  1,702
  1,794
  1,891
  1,992
  2,097
  2,207
  2,323
Total debt, $m
  20,463
  20,878
  24,114
  27,490
  31,008
  34,670
  38,478
  42,436
  46,550
  50,825
  55,267
  59,885
  64,687
  69,681
  74,879
  80,289
  85,925
  91,798
  97,921
  104,308
  110,974
  117,934
  125,203
  132,800
  140,742
  149,047
  157,735
  166,827
  176,344
  186,310
  196,747
Total liabilities, $m
  33,325
  33,740
  36,976
  40,352
  43,870
  47,532
  51,340
  55,298
  59,412
  63,687
  68,129
  72,747
  77,549
  82,543
  87,741
  93,151
  98,787
  104,660
  110,783
  117,170
  123,836
  130,796
  138,065
  145,662
  153,604
  161,909
  170,597
  179,689
  189,206
  199,172
  209,609
Total equity, $m
  2,794
  3,749
  4,108
  4,484
  4,874
  5,281
  5,704
  6,144
  6,601
  7,076
  7,570
  8,083
  8,617
  9,171
  9,749
  10,350
  10,976
  11,629
  12,309
  13,019
  13,760
  14,533
  15,341
  16,185
  17,067
  17,990
  18,955
  19,965
  21,023
  22,130
  23,290
Total liabilities and equity, $m
  36,119
  37,489
  41,084
  44,836
  48,744
  52,813
  57,044
  61,442
  66,013
  70,763
  75,699
  80,830
  86,166
  91,714
  97,490
  103,501
  109,763
  116,289
  123,092
  130,189
  137,596
  145,329
  153,406
  161,847
  170,671
  179,899
  189,552
  199,654
  210,229
  221,302
  232,899
Debt-to-equity ratio
  7.324
  5.570
  5.870
  6.130
  6.360
  6.560
  6.750
  6.910
  7.050
  7.180
  7.300
  7.410
  7.510
  7.600
  7.680
  7.760
  7.830
  7.890
  7.960
  8.010
  8.070
  8.110
  8.160
  8.210
  8.250
  8.290
  8.320
  8.360
  8.390
  8.420
  8.450
Adjusted equity ratio
  0.020
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,141
  23
  39
  -16
  -87
  -162
  -240
  -321
  -405
  -493
  -584
  -563
  -661
  -763
  -869
  -979
  -1,094
  -1,213
  -1,338
  -1,467
  -1,602
  -1,743
  -1,889
  -2,043
  -2,202
  -2,370
  -2,544
  -2,727
  -2,917
  -3,117
  -3,326
Depreciation, amort., depletion, $m
  1,176
  1,353
  1,472
  1,596
  1,725
  1,859
  1,999
  2,144
  2,295
  2,452
  2,615
  2,668
  2,844
  3,027
  3,218
  3,417
  3,623
  3,839
  4,063
  4,298
  4,542
  4,797
  5,064
  5,343
  5,634
  5,938
  6,257
  6,591
  6,940
  7,305
  7,688
Funds from operations, $m
  3,446
  1,376
  1,510
  1,580
  1,638
  1,697
  1,759
  1,823
  1,890
  1,959
  2,031
  2,106
  2,183
  2,265
  2,349
  2,437
  2,529
  2,625
  2,726
  2,830
  2,940
  3,055
  3,174
  3,300
  3,431
  3,569
  3,713
  3,864
  4,022
  4,188
  4,362
Change in working capital, $m
  552
  34
  36
  37
  39
  41
  42
  44
  46
  47
  49
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  96
  101
  105
  110
  116
Cash from operations, $m
  2,894
  1,715
  1,475
  1,543
  1,599
  1,657
  1,717
  1,779
  1,844
  1,912
  1,982
  2,054
  2,130
  2,209
  2,292
  2,377
  2,467
  2,560
  2,658
  2,760
  2,866
  2,977
  3,094
  3,216
  3,343
  3,477
  3,617
  3,763
  3,917
  4,078
  4,246
Maintenance CAPEX, $m
  0
  -1,124
  -1,238
  -1,356
  -1,480
  -1,609
  -1,743
  -1,883
  -2,028
  -2,179
  -2,336
  -2,499
  -2,668
  -2,844
  -3,027
  -3,218
  -3,417
  -3,623
  -3,839
  -4,063
  -4,298
  -4,542
  -4,797
  -5,064
  -5,343
  -5,634
  -5,938
  -6,257
  -6,591
  -6,940
  -7,305
New CAPEX, $m
  -2,345
  -2,452
  -2,563
  -2,675
  -2,787
  -2,901
  -3,017
  -3,136
  -3,259
  -3,387
  -3,520
  -3,659
  -3,804
  -3,957
  -4,117
  -4,287
  -4,465
  -4,653
  -4,851
  -5,060
  -5,281
  -5,514
  -5,759
  -6,018
  -6,292
  -6,580
  -6,883
  -7,203
  -7,540
  -7,895
  -8,269
Cash from investing activities, $m
  -2,108
  -3,576
  -3,801
  -4,031
  -4,267
  -4,510
  -4,760
  -5,019
  -5,287
  -5,566
  -5,856
  -6,158
  -6,472
  -6,801
  -7,144
  -7,505
  -7,882
  -8,276
  -8,690
  -9,123
  -9,579
  -10,056
  -10,556
  -11,082
  -11,635
  -12,214
  -12,821
  -13,460
  -14,131
  -14,835
  -15,574
Free cash flow, $m
  786
  -1,862
  -2,326
  -2,488
  -2,668
  -2,853
  -3,043
  -3,240
  -3,443
  -3,654
  -3,874
  -4,103
  -4,342
  -4,592
  -4,853
  -5,127
  -5,415
  -5,716
  -6,032
  -6,364
  -6,712
  -7,078
  -7,463
  -7,867
  -8,291
  -8,737
  -9,205
  -9,697
  -10,214
  -10,757
  -11,328
Issuance/(repayment) of debt, $m
  36
  1,718
  3,236
  3,376
  3,518
  3,661
  3,808
  3,958
  4,114
  4,275
  4,443
  4,618
  4,802
  4,994
  5,197
  5,411
  5,636
  5,873
  6,123
  6,387
  6,666
  6,960
  7,270
  7,597
  7,942
  8,305
  8,688
  9,092
  9,517
  9,965
  10,437
Issuance/(repurchase) of shares, $m
  -79
  1,098
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  74
  152
  234
  318
  405
  495
  589
  686
  787
  892
  1,001
  1,114
  1,232
  1,354
  1,482
  1,615
  1,754
  1,899
  2,050
Cash from financing (excl. dividends), $m  
  -457
  2,816
  3,236
  3,376
  3,518
  3,661
  3,808
  3,958
  4,114
  4,275
  4,443
  4,618
  4,876
  5,146
  5,431
  5,729
  6,041
  6,368
  6,712
  7,073
  7,453
  7,852
  8,271
  8,711
  9,174
  9,659
  10,170
  10,707
  11,271
  11,864
  12,487
Total cash flow (excl. dividends), $m
  338
  -143
  909
  888
  849
  808
  765
  719
  671
  621
  569
  515
  460
  403
  344
  283
  221
  157
  91
  23
  -47
  -119
  -193
  -270
  -349
  -431
  -517
  -605
  -697
  -792
  -891
Retained Cash Flow (-), $m
  355
  -1,755
  -360
  -375
  -391
  -407
  -423
  -440
  -457
  -475
  -494
  -513
  -534
  -555
  -577
  -601
  -626
  -653
  -680
  -710
  -741
  -773
  -808
  -844
  -882
  -923
  -965
  -1,010
  -1,057
  -1,107
  -1,160
Prev. year cash balance distribution, $m
 
  800
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  550
  513
  459
  401
  342
  279
  214
  146
  75
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  11.60
  12.18
  12.79
  13.43
  14.10
  14.80
  15.55
  16.32
  17.14
  18.00
  18.90
  19.84
  20.83
  21.87
  22.97
  24.12
  25.32
  26.59
  27.92
  29.31
  30.78
  32.32
  33.93
  35.63
  37.41
  39.28
  41.25
  43.31
  45.47
  47.75
PV of cash for distribution, $m
 
  0
  437
  357
  277
  208
  149
  101
  64
  35
  14
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  82.7
  82.2
  81.4
  80.4
  79.3
  78.0
  76.5
  75.0
  73.3
  71.6
  69.8
  68.0
  66.1
  64.2
  62.3
  60.4
  58.5
  56.6
  54.7

The AES Corporation operates as a diversified power generation and utility company. It owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries. The company also owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses a range of fuels to generate electricity, including hydro, coal/ petroleum coke, oil, gas/diesel, biomass, solar, wind, energy storage, and landfill gas. The company owns and/or operates a generation portfolio of approximately 30,379 megawatts. It has operations in the United States, Chile, Colombia, Argentina, Brazil, Mexico, Central America, the Caribbean, Europe, and Asia. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was founded in 1981 and is headquartered in Arlington, Virginia.

FINANCIAL RATIOS  of  AES (AES)

Valuation Ratios
P/E Ratio -6.5
Price to Sales 0.5
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 2.6
Price to Free Cash Flow 13.6
Growth Rates
Sales Growth Rate -4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.6%
Cap. Spend. - 3 Yr. Gr. Rate 3.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.3
LT Debt to Equity 685.8%
Total Debt to Equity 732.4%
Interest Coverage 1
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 4.1%
Return On Total Capital -4.9%
Ret/ On T. Cap. - 3 Yr. Avg. -0.2%
Return On Equity -38.4%
Return On Equity - 3 Yr. Avg. -4.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 17.9%
Gross Margin - 3 Yr. Avg. 18.9%
EBITDA Margin 19%
EBITDA Margin - 3 Yr. Avg. 23.1%
Operating Margin 1%
Oper. Margin - 3 Yr. Avg. 6.3%
Pre-Tax Margin 1%
Pre-Tax Margin - 3 Yr. Avg. 6%
Net Profit Margin -8.4%
Net Profit Margin - 3 Yr. Avg. -0.5%
Effective Tax Rate -137.2%
Eff/ Tax Rate - 3 Yr. Avg. -23.5%
Payout Ratio -25.4%

AES stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AES stock intrinsic value calculation we used $13586 million for the last fiscal year's total revenue generated by AES. The default revenue input number comes from 2016 income statement of AES. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AES stock valuation model: a) initial revenue growth rate of 10.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.6%, whose default value for AES is calculated based on our internal credit rating of AES, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of AES.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AES stock the variable cost ratio is equal to 91.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AES stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.3% for AES.

Corporate tax rate of 27% is the nominal tax rate for AES. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AES stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AES are equal to 178.7%.

Life of production assets of 21.6 years is the average useful life of capital assets used in AES operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AES is equal to 2.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2794 million for AES - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 665.474 million for AES is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of AES at the current share price and the inputted number of shares is $7.5 billion.


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COMPANY NEWS

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▶ Houston energy company names new CFO   [03:10PM  American City Business Journals]
▶ The AES Corp. Value Analysis (NYSE:AES) : April 17, 2017   [Apr-17-17 01:20PM  Capital Cube]
▶ AES Announces Quarterly Dividend   [08:00AM  Business Wire]
▶ Q&A: Miro Nguyen, Generation Dayton Featured Professional of the Month   [06:25AM  American City Business Journals]
▶ It's official: Two Ohio DP&L coal plants to close   [11:20AM  at bizjournals.com]
▶ The Biggest Loser: AES Corp. Tumbles 6.6%   [04:51PM  at Barrons.com]
▶ This Week in Solar   [Feb-25-17 09:03AM  at Motley Fool]
▶ [$$] AES and Aimco to Buy sPower From Fir Tree Partners   [11:57AM  at The Wall Street Journal]
▶ Major 200-acre solar farm planned for Kauai   [Feb-09-17 10:20AM  at bizjournals.com]
▶ DPL settlement to close two power plants, shift to green energy   [Jan-31-17 01:55PM  at bizjournals.com]
Stock chart of AES Financial statements of AES
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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