The AES Corporation (AES) Stock Valuation — PE Analysis
Diversified Utilities · NYSE
Current Price
$14.79
PE Ratio (TTM)
5.6x
Intrinsic Value
$25.91
+42.9% margin of safety
COMPETITIVE MOAT
↑Regulated Asset Base
AES operates in regulated utility markets, allowing for predictable returns on invested capital. This regulatory framework provides a stable revenue stream and limits direct competition.
↑Scale and Diversification
AES's large, diversified portfolio of generation and distribution assets across geographies offers operational efficiencies. This scale provides a competitive advantage in securing fuel and managing costs.
↑Long-Term Contracts
The company secures long-term power purchase agreements (PPAs) with creditworthy off-takers. These contracts ensure predictable cash flows and reduce exposure to volatile energy prices.
INVESTMENT RISKS
↓Interest Rate Sensitivity
As a capital-intensive business, AES is sensitive to changes in interest rates, which can affect financing costs and profitability. Rising rates increase the cost of debt.
↓Commodity Price Volatility
Fluctuations in the prices of natural gas, coal, and other fuel sources can impact operating costs and margins. While PPAs mitigate some risk, uncontracted generation is exposed.
↓Execution Risk on New Projects
AES's growth strategy relies on developing and constructing new energy infrastructure. Delays, cost overruns, or permitting issues can negatively impact financial performance.
Base case
AES base case PE valuation
At a current price of $14.79, the base case PE valuation puts AES fair value near $25.91 per share. That figure assumes 7.7% yearly earnings growth, a target PE multiple of 5.52x, and a 10% discount rate.
Intrinsic Value
$25.91
Margin of safety
+42.9%
Expected annual return
+11.9%
Base case assumptions: 7.7% annual earnings growth, 5.52x target PE, 10% discount rate, 5 year projection. Data as of 2026-09-11.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the AES PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for The AES Corporation respond.
Open PE Calculator for AESCompany Overview
The AES Corporation operates as an international enterprise primarily focused on electricity generation and distribution. Its activities involve both the ownership and management of power plants, producing and supplying electricity to a diverse clientele that includes other utility companies, large industrial consumers, and various intermediate purchasers. Beyond generation, AES also functions as a utility provider, managing infrastructure to either produce or acquire, then transmit, distribute, and ultimately sell power directly to end-users across residential, commercial, industrial, and governmental sectors. The company is also an active participant in the wholesale electricity market. For power production, AES utilizes a broad spectrum of energy sources and advanced technologies. This includes conventional fuels like coal and natural gas, as well as a significant commitment to renewables such as hydroelectric, wind, solar, and biomass. Its renewable portfolio further incorporates energy storage solutions and landfill gas. With an operational generation capacity of approximately 31,459 megawatts, the company maintains a substantial global presence, conducting business in the United States, Puerto Rico, various nations across Central and South America (including El Salvador, Chile, Colombia, Argentina, Brazil, Mexico), the Caribbean, Europe, and Asia. Founded in 1981, the company was initially named Applied Energy Services, Inc., before officially rebranding to The AES Corporation in April 2000. Its corporate headquarters are located in Arlington, Virginia.
Financial Metrics — AES PE Stock Valuation Data
PE Ratio (TTM)
5.6x
PEG Ratio
0.07
Earnings Yield
18.09%
ROE (TTM)
37.9%
Revenue/Share (TTM)
$18.31
Dividend Yield
4.76%
Debt/Equity
6.50x
Frequently Asked Questions
What is the PE ratio of AES?
The trailing twelve-month PE ratio of AES reflects how much investors pay per dollar of The AES Corporation's earnings. This metric is most useful when compared to Diversified Utilities peers and the company's own historical range.
Is AES overvalued based on PE ratio?
AES's PE of 5.6x combined with a PEG ratio of 0.07 provides a growth-adjusted perspective. A PEG below 1.0 means the P/E is low relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Diversified Utilities, a DCF analysis may be more appropriate.
How do I value AES stock using PE ratio?
To value The AES Corporation using PE: (1) Compare the current PE (5.6x) against the Diversified Utilities median to assess relative pricing, (2) check the PEG ratio (0.07) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of AES?
AES's PEG ratio is 0.07, calculated by dividing the PE ratio (5.6x) by the expected earnings growth rate. A PEG below 1.0 means the P/E is low relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for AES stock valuation?
PE ratio gives a quick relative read — how AES is priced versus Diversified Utilities peers. DCF provides an absolute value based on projected free cash flows. For AES, with a strong ROE of 37.9%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See AES DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Utilities valuationsP/E and DCF value AES with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-09-11. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.