AES Corp (AES): Today's Featured Utilities Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

AES ( AES) pushed the Utilities sector lower today making it today's featured Utilities laggard. The sector as a whole closed the day down 0.5%. By the end of trading, AES fell 24 cents (-2.1%) to $11.26 on heavy volume. Throughout the day, nine million shares of AES exchanged hands as compared to its average daily volume of 5.4 million shares. The stock ranged in price between $11.23-$11.54 after having opened the day at $11.48 as compared to the previous trading day's close of $11.50. Other companies within the Utilities sector that declined today were: Energy Company of Minas Gerais ( CIG), down 20.9%, Centrais Eletricas Brasileiras ( EBR), down 7.9%, Basic Sanitation Company of the State of Sa ( SBS), down 7.6%, and Centrais Eletricas Brasileiras ( EBR.B), down 7.1%.
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The AES Corporation, a power company, operates a portfolio of electricity generation and distribution businesses. Its Generation business owns and/or operates power plants to generate and sell power to wholesale customers, such as utilities and other intermediaries. AES has a market cap of $8.57 billion and is part of the utilities industry. The company has a P/E ratio of 19.1, below the average utilities industry P/E ratio of 63.7 and above the S&P 500 P/E ratio of 17.7. Shares are down 3.2% year to date as of the close of trading on Tuesday. Currently there are five analysts that rate AES a buy, no analysts rate it a sell, and one rates it a hold.

TheStreet Ratings rates AES as a hold. The company's strongest point has been its very decent return on equity which we feel should persist. At the same time, however, we also find weaknesses including generally higher debt management risk, poor profit margins and weak operating cash flow.

On the positive front, China Hydroelectric Corporation ( CHC), up 15.2%, AmeriGas Partners ( APU), up 3%, Pure Cycle Corporation ( PCYO), up 2%, and PAA Natural Gas Storage L.P ( PNG), up 1.9%, were all gainers within the utilities sector with Calpine ( CPN) being today's featured utilities sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the utilities sector could consider Utilities Select Sector SPDR ( XLU) while those bearish on the utilities sector could consider ProShares UltraShort Utilities ( SDP).

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